TEHRAN: Since Iran is the “largest state sponsor of terrorism in the world,” the above headlines mandate required public and legislative support for U.S. exports of liquefied natural gas. Iran’s natural gas industry has been hampered by U.S. and European-led sanctions that have restricted the flow of foreign direct investment and the transfer of technology, but Iran is swimming in natural gas and wants to make a splash on the international export stage.
As Western sanctions are lifted, Iran seeks to become a major player in the rapidly globalizing gas market. Today, traded gas accounts for a rising 30% of all use and will expand in volume by 30% by 2025. Gas will be the primary fuel under COP 21 set last November (here), and annual global demand is rising by 6-8 Bcf/day. Iran produces around 6 Tcf per year, and consumption has been just under that. Production will reach over 10 Tcf by 2030 (here). “Iran has a high success rate of natural gas exploration, which is estimated at 79% compared to the world average success rate of 30% to 35%.”
Despite Western sanctions, Iran’s natural gas production continues to grow as more phases of its largest natural gas field, South Pars, come online. In all, the field Iran shares with neighboring Qatar is being developed in 24 phases. About half of the phases have been completed, and Iran hopes the field, including those centered on oil, will be fully operational in 2018. Located over 60 miles offshore, South Pars holds nearly 40% of Iran’s gas reserves.
Iran contributes just 1% to the total global natural gas trade, with almost 90% of exports going to Turkey. But, a huge buildout in infrastructure means that India, Pakistan, Kuwait, and UAE could all become targets for Iran’s gas. And planned reductions in subsidized pricing, which will help reduce wasteful usage, will free up more of Iran’s gas for exports.
