Iraq's Delays in Finishing Pipeline Hamper Iran Gas Exports

TEHRAN (Tasnim) – While some Iranian energy officials had earlier said Iran’s natural gas exports to Iraq would begin by mid-March 2014, higher consumption in Iran during the cold season and Iraq's delays in constructing its side of the pipeline will defer the project by a few months.

Iraq's Delays in Finishing Pipeline Hamper Iran Gas Exports

Iran, which has the largest gas reserves in the world, seeks to enhance gas production by increasing foreign and domestic investments. But it is still a net importer of the energy source as the local demand has outstripped production increases.

Iran is particularly dependent on imports during winter months, when residential heating demand peaks.

Iran exports natural gas to Turkey, Armenia, and Azerbaijan, and receives pipeline imports from Turkmenistan and the Republic of Azerbaijan. Since 2000, Iran's annual natural gas imports have exceeded its exports in all but two years (2010 and 2012). In 2011 and 2012, Iran accounted for less than 1 percent of global dry natural gas imports and exports, a small figure considering the country's vast reserves.

Long delays in completion of South Pars gas field, the country's largest, is to blame for Iran's negligible share in the global gas trade.

In July 2013, Iranian and Iraqi oil ministers signed the first deal to transfer Iran's natural gas to two Iraqi power plants. The project is aimed at supplying Al-Baghdad and Al-Mansouriyah power plants in Iraq with 25 million cubic meters (mcm) per day of natural gas.

While the two sides are soon to sign another agreement on the export of another 25 mcm per day of natural gas to Iraq, the earlier agreement has hit a snag, as Iraq could not finish construction of the pipeline by the end of summer and has delayed it by six more months.

Iran also finds it difficult, though not impossible, to pump the extra gas to Iraq as its development projects at South Pars are yet to come on stream.

Iranian oil minister said on November 2 that a major boost to the country’s gas exports is high on the agenda of his ministry, and added that a second gas deal with neighboring Iraq will be signed in the near future.

“Iraq calls for an increase in gas imports from Iran, and the second agreement on gas exports from Iran to Iraq will be signed soon,” Bijan Namdar Zanganeh told Tasnim.

The oil minister also stated at the time that his organization considers a significant boost to the export of gas as a high priority, noting that Iran seeks to have a greater share in the global gas trade.

“Regional countries ask for energy exchange with Iran, and Iran has also the capacity to meet their need, especially in providing gas,” Zanganeh added.

Tasnim's economic reporter says Iran's inability to extract and refine enough gas to meet its contractual obligations with neighboring countries is behind its apparent flexibility and readiness to accept the delays of other sides.

He predicts while Iranian gas will sooner or later flow in the pipeline toward Iraq, the fate of Iran's gas exports to pakistan is uncertain, as the country is under intense US pressure to cancel its contract with Iran and has yet to find investors to construct the pipeline on its side of the border.   

In its Statistical Review of World Energy released in June, the BP classed Iran as the world’s top gas reserves holder with 33.6 trillion cubic meters.

The company downgraded Russia’s reserves estimate to 32.9 trillion cubic meters from 44.6 trillion cubic meters in last year's report, putting global proven gas reserves at 187.3 trillion cubic meters as of the end of 2012.

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