Iran holds the second largest gas reserves in the world but it does not occupy the place it merits in the world markets mainly due to geographical, economic and political factors. The technology required for exporting gas poses another challenge
Iran has more than 27 trillion cubic meters of natural gas held mostly in South Pars, North Pars, Kangan, Nar and Khangiran. Estimates indicate that baby boom adds to natural gas consumption in Iran but the country can afford domestic use and earmark gas for exports. Iran also imports gas from Azerbaijan and Turkmenistan because northern gas reserves are far from those located in the south. Turkmenistan started gas exports to Iran in December 1997 under a 190-million-dollar deal. The contract is valid for 25 years and Iran imports between 177 and 212 billion cubic feet of gas from Turkmenistan. South Pars is the largest gas reserve in Iran with more than 13 trillion cubic meters of content. Iran is now busy with development of this giant gas field and contracts of 15 billion dollars have been concluded. Phases 1-14 of South Pars are expected to produce 218,000 barrels per day of gas condensates in 2005 and 628,000 barrels in 2015. Selling South Pars gas can earn 11 billion dollars in thirty years but Iran is facing tight competition from other gas exporters. Qatar and the United Arab Emirates are well present in the Extreme East markets and Qatar has been developing its share of South Pars. Besides Turkey, Iran can export gas to Ukraine, Europe, Pakistan, Armenia, Azerbaijan, Georgia, Taiwan, South Korea and China.
Iran began exporting gas to Turkey in 2001. The amount stood at three billion cubic meters in 2002 and 3.4 billion cubic meters a year after. Under their deal, Iran"s gas exports to Turkey would reach 10 billion cubic meters per year. Turkey halted gas imports from Iran in June 2002 under the pretext of low quality but the main reason must have been the price. In November the same year, Turkey announced it would resume gas imports. Iran signed a memorandum of understanding with Greece in March 2002 to extend Iran-Turkey gas pipeline to the north of this country. The same pipeline can pump gas to Romania and Bulgaria. Iran is also close to reaching agreement with Austria for gas exports in 2009.
Iran is also on the verge of agreement with India and Pakistan for a gas pipeline. India is a potential demander for natural gas in Phases 6-8 of South Pars. Iran may start gas exports to India in 2010. Moreover, the two countries have signed a deal for Indian purchase of Iran"s liquefied natural gas (LNG). LNG production provides Iran with a good opportunity in the global markets. Natural gas is difficult to carry and Iranians are preoccupied with how to export the gas produced in South Pars. Shared by Iran and Qatar, South Pars holds more than 13 trillion cubic feet of gas. Divided into 25 phases, the giant field is supposed to be lucrative. South Pars was discovered in the 1970s but nobody imagined that it can produce such huge wealth. There was no precise estimation of the reserves hidden in this offshore field and no efforts were undertaken for recovery. Gas recovery from such fields requires investment in the long-term but Iran was poor in technology and it could not attract enough foreign investment. After the 1979 Islamic Revolution, the country was at war with Iraq and the United States imposed trade sanctions on the country. Moreover, the Constitution had set limits for foreign investment in the country. But the Persian Gulf Arab state of Qatar was quick to mobilize its forces in 1992 for recovery. This small sheikhdom managed to gather capital and technology and won a foothold in the world markets. Notwithstanding the obstacles, Qatar promoted its job and invested in production of liquefied natural gas (LNG) in a bid to capture the trans-regional markets. At a time when Iran was indulged in investment in its free trade zones Qataris took advantage of the time and launched exploration in South Pars. The free zones have turned out to be channels for import of low-quality products. South Pars is the most lucrative project in Iran and the country is expected to further concentrate on it. A rough estimate reveals that South Pars reserves can meet the world?s fuel demand in ten years and Iran should consider exports.
We should not forget that Qataris are working shoulder-to-shoulder with us and they might export our gas. In the light of growing demand for gas in the world, Iran should pay due attention to producing LNG and building containers for its carrying