DUBAI, Dec 10: The world’s largest gas reserves may tempt some energy companies back to Iran if sanctions are lifted, but Tehran is unlikely to become a significant gas supplier to Europe or Asia for at least a decade.
European companies with the technology to fully exploit Iran’s vast South Pars field under the Gulf abandoned it in the late 2000s, under US pressure, dashing its hopes of following Qatar’s meteoric rise up the global gas exporters’ league.
Last month’s nuclear deal between the West and the new Iranian government has ignited hopes that its oil production could bounce back if Washington and the European Union relax controls on exports.
But Iran has little chance of becoming a significant gas exporter for at least a decade because of high domestic demand and internal obstacles to developing reserves, which were a problem long before sanctions forced foreigners out.
The lifting of sanctions on Iran “could potentially have a huge impact on exports over the longer term, but it will take years for things to get moving,” Laurent Ruseckas, senior adviser on the Global Gas team at consultants IHS, said.
In the short term, it makes more economic sense for Iran to use gas to satisfy domestic demand for power generation and industry and for re-injection into ageing oilfields to maintain production, Ruseckas said.
Oilfield re-injection is a higher-value use for gas than exports, because oil sells for much more on the global market and does not require billions of dollars in capital investment in gas export projects that take years to pay back.
Over 1 trillion cubic feet (tcf), or over 28 billion cubic metres (bcm), of gas was re-injected to help boost oil production in 2011, according to the US Energy Information Administration, and some estimates indicate that over 8 bcf/d (around 83 bcm/year) will be needed within a decade.
Iran’s marketed gas production, excluding flared and reinjected gas, has more than doubled to 160.5 bcm in 2012 from 75 bcm in 2002.
But Tehran has looked on while Qatar has become one of the world’s richest countries after western energy companies built multi-billion dollar plants over the last decade that turned the tiny Gulf state into the world’s largest liquefied natural gas (LNG) exporter.
The two countries share the world’s largest gas field, which Iran calls South Pars and Qatar the North Field. It straddles their offshore Gulf border and accounts for nearly all of Qatar’s gas production and around 35 percent of Iran’s.
According to figures from the Pars Oil and Gas Company, which manages the whole project, phases 13 to 24 could add up to 142 bcm/year of capacity by 2019, if completed on time.
Iran already produces more gas than Qatar. The difference is that Qatar, with a population of less than 2 million, uses just 26 bcm of it, leaving 125 bcm free for export, according to data from BP.
Iran has used nearly all the gas it produces to supply its 77 million people with heat, electricity and fuel. Domestic demand has risen to 156 bcm in 2012 from 79 bcm in 2002, according to BP figures, which exclude gas used for re-injection.—Reuters
