Iran: Five LNG plants to open in three years

Iran expects to bring five LNG projects online in the next three years, including a liquefaction facility which is 60% complete, head of the National Iranian Gas Company (NIGC) says. 

The country has the world’s largest gas reserves but Western sanctions have hampered plans to build Iran's first facility for freezing gas for export by special tankers.

NIGC Chief Executive Hamidreza Araqi is hopeful that the most advanced project, Iran LNG which began construction in 2007 with a capacity to produce 10 million metric tons a year, would become operational in the next one and half years.

“Among the five LNG plants under construction, the so-called Iran LNG has 60% physical progress and we hope to complete it in the next one and half years after finding an investor and enter the LNG market thereafter,” he said.

Several European companies have proposed to participate in the projects but negotiations have yet to be finalized, Araqi said on the sidelines of a high-profile summit of Gas Exporting Countries Forum in Tehran.

Investment plans

Royal Dutch Shell, Spain’s Repsol and France’s Total abandoned three LNG projects when the West imposed new sanctions on Tehran in 2011, banning supply of energy equipment including high-tech liquefaction articles.

A nuclear accord reached in July requires sanctions to be lifted around early next year, setting off a surge of new interest in business with Iran among international companies.

The resumption of the three projects along with Iran LNG and another plan to build a facility for floating production of LNG will create a capacity for 40 million metric tons of frozen gas a year which Iran seeks to export entirely.

Minister of Petroleum Bijan Zangeneh has said a French company and the Belgians were interested in floating production of liquefied natural gas off the Kharg Island. Germany’s industrial gases maker Linde has also indicated its readiness to join Iran’s LNG projects. 

Iran is the world’s fourth biggest producer of natural gas, with 173 billion cubic meters (bcm) a year. It plans to double output to more than 1 bcm a day in the next four years, Araqi said on Tuesday.

Exports 

Exports, however, are limited amid soaring residential demand which has made the country the world's fourth biggest gas consumer after the US, Russia and China. On Tuesday, Zangeneh warned that Iran might turn into a net importer of gas in the next few years if consumption is not checked. 

More than 50 bcm is also used to fuel power plants, while plentiful amount of gas is injected into Iranian oilfields to boost production. 

Iran currently exports about 10 bcm a year to Turkey, Azerbaijan and Armenia through pipelines and imports gas from Turkmenistan for use in its northern provinces which are far from hydrocarbon reserves in the country’s south.   

Several gas production projects are in different stages of implementation which mainly includes development of the giant South Pars field.

According Araqi, negotiations are underway with five neighboring countries for starting or boosting gas exports.

Deals for starting gas flow to Iraq and Pakistan in the “near future” has been finalized while there are talks to build pipelines to India, Oman and Kuwait and additional capacities for exports to Turkey and Iraq, he said.

“Iran’s gas production capacity will reach 330 bcm a year in 2017 which will make it possible to increase exports,” Araqi said.

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