Iran can contribute to diversification of gas supplies to Europe

By Azernews

By Kamila Aliyeva

The Islamic Republic of Iran, a country with the largest natural gas reserves in the world after Russia, strives to sell its natural gas in the European markets. 

From the EU point of view, Iran could contribute directly or indirectly to the diversification of natural gas supplies to Europe, a source in the European Commission told Trend on May 24.

The source noted that the supply of Iranian gas to Europe could be provided by connecting Iran to the Southern Gas Corridor, designed to bring Azerbaijan’s Shah Deniz gas to Europe.

"The launch of the Southern Gas Corridor will provide Iran with an excellent opportunity to enter the EU gas market," the source said, further adding that the Iranian gas supplies to Europe in the form of LNG are possible.

The source noted that the Iranian LNG can increase the liquidity and availability of gas on the world market, and thereby increase the availability of supplies and reduce prices.

Besides, the source added that the issue of how to supply gas to Europe - through pipelines or through LNG should be decided by Iran itself.

Iran's proven reserves amount to 33.5 trillion cubic meters of gas. However, the country lacks necessary export infrastructure to realize gas sales. Under sanctions, Iran was banned from the global financial system, preventing the development of its oil and gas fields and necessary infrastructure.

Currently, Iran considers exporting its gas in LNG form as well. To date, Iran does not have the capacity to liquefy gas, but the country is negotiating with foreign companies to implement such projects.

The country has a semi-finished LNG plant, suspended mid-2000s due to sanctions, but hasn’t re-launched the plant yet. The capacity of project is 10.4 million tons per year of liquefaction of natural gas. It has costed $2.5 billion and needs further $5.5-9.5 billion to be completed.

Moreover, there is no transit gas pipeline connecting Iran with the EU. Iran has two main options to deliver its gas to Europe which are to either construct new pipeline via Turkey or build a connector to the Trans-Anatolian pipeline - TANAP (Turkish leg of the Southern Gas Corridor).

Given the damages caused by sanctions on Iran’s energy sector and the delays in the development of its gas fields in the Persian Gulf, Iran needs at least 5-6 years to prepare its exports to Europe, for the construction of new pipelines and development of new fields.

Iran’s gross gas output stands at 285bn m3/yr. However, it plans to increase this volume to about 440 bcm/y by 2021 after full operational of South Pars and starting gas production from other projects like Kish gas field.