Iran’s role in future world energy market crucial

Energy Trade

The 12th IIES International Oil and Gas Conference entitled „Developments in Geopolitics of Energy and the Role of Natural Gas” kicked off Sunday, highlighting the crucial role of Iran in the future world energy market.

Managers and experts from 16 states, including Austria, the Netherlands, Britain, Japan, Russia, France, and Belgium have participated in the two-day gathering, out of whom 13 deliver speech, said an Institute for International Energy Studies (IIES) official. Mohsen Rowhani, the international affairs head of IIES, added predictions showed that share of natural gas in the countries’ energy basket would soar until 2025. „Gas reserves, different transportation of gas in comparison with oil, privatization, shifting consumer markets from Europe and the United States to Asia particularly China, and changes in national companies’ roles, are among factors behind changes in energy geopolitics,” he said. The first „call for paper” was announced on the website of the institute last March, said Rowhani, adding 51 articles were sent to the secretariat, out of which one-third were accepted. He said 1,000 to 1,200 participated in the previous editions of the conference and over 900 registered for the underway gathering, of whom 80 were from foreign countries. On the sideline of the conference, top officials elaborated on different issues ranging from Sinopec’s involvement in the Yadavaran oilfield development plan to foreign investment in Iran’s LNG project.

Iran-Sinopec contract
Iran and the Chinese company Sinopec here Sunday signed a buyback contract on the development of giant Yadavaran oilfield. The agreement was signed by Hossein Noqrekar-Shirazi, Iranian Petroleum Ministry’s international affairs head, and Zhou Baixiu, head of Sinopec’s International Exploration and Production Unit, in the presence of Iran’s Oil Minister Gholamhossein Nozari. Based on the contract, the Chinese company is duty-bound to invest in and develop the field. Sinopec agreed in 2004 to take the lead in developing Yadavaran field and to buy 10 million tons of liquefied natural gas (LNG) a year for 25 years. But talks to finalize the contract have been protracted, Reuters reported. Yadavaran field is expected to produce 300,000 barrels per day of crude. The field has in-place oil reserves of 18.3 billion barrels, of which 3.2 billion barrels are recoverable, according to Iranian estimates. Its gas reserves amount to 12.5 trillion cubic feet, of which 2.7 trillion are recoverable.

Total ready to invest
Nozari said that the French oil company, Total, has voiced preparedness to make a $12-billion investment in Iran’s LNG project. Speaking to reporters on the sidelines of the conference here Sunday, the minister referred to Total’s readiness for investment in Iran, stressing that the US sanctions against Iran’s oil sector had had no impact. „I would like to say it in a straightforward manner that sanctions have left no impact on the production sector of this industry and our production capacity has grown from 4 million to 4.15 million barrels per day,” he said. „In the development and implementation of projects, we strive to choose the most appropriate companies,” the minister added. „Total is now ready to make a $12 billion investment in Iran’s LNG project and it has never said that sanctions have posed a problem for it. Actually the problem pertains to prices as project prices have increased and the issue has lengthened negotiations,” he said.

$10 billion investment
National Iranian Tanker Company (NITC) Managing Director Mohammad Suri here Sunday said the country would need to invest $10 billion to carry liquefied natural gas (LNG) in 2011. The NITC chief made the statement in the 12th IIES International Oil and Gas Conference entitled „Developments in Geopolitics of Energy and the Role of Natural Gas”. Suri predicted that Iran would produce 83 million tons of LNG in 2011 and 40 LNG carriers would be required for transportation of the commodity. He said the NITC had 30 LNG carriers with a 6.214 million ton capacity, adding the company shipped 82 million tons of products in the previous year.

The official said the company had placed orders for five ships and 14 oil tankers with domestic and overseas builders respectively that would bring the NITC’s total capacity to 10.936 million tons in 2009. He said Iran is the second-largest holder of gas reserves in the world, adding Russia stood top as it owned 26% of the world’s gas deposits, Iran ranked second with a 16% share, and Qatar was in the third place, accounting for 14% of global volume. „The three countries are the main producers of gas in the world,” said Suri, adding, „Given their huge gas reserves in South Pars field, Iran and Qatar constitute the largest energy corridor in the Persian Gulf region.” The official said Japan was the largest consumer of LNG in 2006 as it used 39% of the world’s gas last year, adding South Korea stood second, consuming 16% of the world’s total liquefied natural gas. According to him, the world’s total LNG output in 2007 will reach 407 million cubic meters while the figure will soar to 635 million cubic meters in 2013 and 1.248 billion cubic meters in 2020.

The NITC head said four phases of Iran’s South Pars gas field with a 41 million cubic meter of LNG production capacity, North Pars field with a 20 million cubic meter capacity, Golshan field with a 10 million cubic meter capacity, and Ferdowsi field with a 10 million cubic meter capacity would export the energy carrier. Suri had already told PIN that Iran would sign a trilateral contract on the building of LNG vessels and exports. „Concurrent with the signing of the contract on gas production, LNG plant, and export docks, the contract on the building of LNG carriers should be inked and the issue demands the finalization of LNG contracts,” said the NITC head. He added South Korea, Japan, and China were the builders of 90% of LNG carriers in the world and Spain and France constructed a limited number of the vessels.

Europeans show interest
„Iran LNG Company” Managing Director Ali Kheir-Andish said four European companies had voiced their readiness to participate in Iran’s LNG project and to purchase the commodity. European states would need 100 million cubic meters of gas per day by 2010, said Kheir-Andish, adding four international companies from Germany, Spain, and Austria had expressed their preparedness to help implement LNG project and to buy liquefied natural gas from Iran. „They are eager to make investments in gas producing projects in an attempt to meet their energy need,” said the official. According to the plan, the LNG output would double every 3.5 years, said the managing director, adding the country would produce some 22 million tons of NLG in 2015, 44 million tons in 2018, and about 88 million tons in 2022. Kheir-Andish predicted that the first LNG package would be injected into market in 2010. He said negotiations on the finding a financier for the „Iran LNG” project would continue until Dec. of the current year, adding some Asian and European groups had expressed their willingness to finance the project. Iran has already signed a $585-million contract with an engineering consortium comprising of two Iranian companies and an Italian company to build a treatment or gas sweetening plant for the

Iran LNG project.
APS Engineering, a small, private Italian engineering company that has worked for a variety of clients including Eni, the Italian oil and gas multinational, told the Financial Times it was the Italian company in the consortium. This contract was awarded just days after the design plans for the plant were submitted to Iranian officials by another consortium, made up of a German company, Linde, Hyundai of South Korea, and Snamprogetti, an Eni subsidiary. The design contract was initially agreed as far back as 2002.

Royal Dutch Shell, French giant Total, and Spain’s Repsol have stakes in Iran’s other two main LNG projects, as well. Manager of Total Christophe de Margerie said the giant energy group would press on with talks on Pars LNG, Iran’s first liquefied natural gas export terminal, a project which requires a $15 billion investment, adding Total would look at the political situation only once a deal is ready. Paulo Scaroni, Eni’s chief executive, told the Financial Times that Eni had ‘no intention’ of pulling out of Iran. Other companies are, however, taking a bolder stance when it comes to Iran LNG. Union Fenosa, the Spanish energy company, says its subsidiary, Socoin, was awarded a €32.5 million engineering contract for Iran LNG in August. OMV, the Austrian oil and gas company, in April signed a preliminary agreement with Tehran for a stake in Iran LNG, but this is yet to be finalized. „Our interest in the Iran LNG project lies on the table,” it said. E.ON, the world’s largest utility, seeks to buy liquefied natural gas from Nigeria, an E.ON manager told Westdeutsche Allgemeine Zeitung. Dietrich Gerstein, head of E.ON’s LNG purchasing unit, said E.ON was interested in natural gas from Iran. (tehrantimes)

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