Monday, April 26, 2010

Iran to Increase Gas Import

The National Iranian Gas Company announced today that the import of gas from Turkmenistan would reach 40 million cubic meters a day, a 5-fold increase from the current 8 MMcm/day [Shaha News Agecny, 26 April 2010]. Turkmenistan will commission a second gas pipeline by November to accommodate Iran’s growing imports.

Iran has the world’s second largest gas reserves (after Russia), and shares the world’s largest natural gas field (with Qatar) in the Persian Gulf waters, but the country does not produce sufficient natural gas for domestic use.

Aside from its need to increase natural gas production, Iran needs to raise its oil production and exports as well as expand its refining capacity to meet domestic demands for gasoline. NIOC, the country’s giant state-owned oil company, has estimated that Iran would need some $150 billion in new investments over the next decade to build up its energy sector. But the growing sanctions have resulted in an exodus of foreign oil and gas giants from Iran, bringing the level of foreign investments in oil and gas sector to near zero.

On Saturday, the IRGC, the country’s powerful branch of armed forces, announced that it could fill the gap in the country’s energy sector left by Western oil firms pulling out in the face of the new sanctions. As good a fighting force that IRGC might have become, it is clear that it would fail miserably if it wanted to transform itself into a giant oil and gas company, dependant on high technology and global capital markets to meet the investment needs of the Iranian energy sector.


Mark Pyruz said...

The figures I've seen provide an annual capacity for the new pipeline (opened last January) at 20 bcm. This has been planned for not only to meet the energy requirements of Iran's Caspian energy requirements, but also enable Iran to free its own gas production in the southern fields for export. This in turn facilitates the use of Iran to be used as a hub for different forms of Turkmen exports, including perhaps involving this new commission on a second gas pipeline (a positive development).

There are reports that contracts have been signed providing $15-20 billion dollars of Chinese investment in Iran's energy industry, with a similar amount being negotiated. (This may represent one source of reluctance on China's part to accede to further sanctions).

It's a curious position for the IRGC to diffuse its military focus further with an expanded scope into the economic sphere, especially given the external threat of aggression the country faces. One can speculate that this represents a transformative phase in the ongoing development of the Islamic Republic, and that in some ways like China's PLA, it will be able to provide some of the hard lifting during this period of challenges.

Nader Uskowi said...


20 MMcm was the capacity of the existing Turkmenistan's pipeline. That capacity will double to 40 MMcm. Iran, however, was importing only 8 MMcm. NIGC is saying now that they would use all that capacity as soon as the second pipeline is commissioned. The added import will be used for domestic consumption, there are no new export contracts on horizon. NIOC, however, might use more gas to inject into the aging oil wells to boost production, an older method of increasing the yield of those wells.

China's PLA indeed did some hard lifting. But IRGC's role in the Iranian economy is beyond anything ever witnessed.

Anonymous said...

by seein the big picture,....
one realizes that instead of piping the whole way from there to europe... they import "x" amount from a logistical partner for internal consumption... on the other hand export the gas on the other side of the country to "Y" and cash in on it. probably with a big plus to finance the next drilling.

its a logistical issue and not a fall out.

bless Iran