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Tuesday, Jul 14, 2015
Iran needs 5 years to become major gas exporter: Fitch

The global rating agency Fitch says Iran will become a major exporter of natural gas within the next five years...
The global rating agency Fitch says Iran will become a major exporter of natural gas within the next five years.
Fitch in a statement released on Friday said Iran has the long-term potential to become one of the world's top gas producers, thanks to its 34 trillion cubic meters (tcm) of natural gas reserves, or around 18% of the world's total, Iran’s SHANA news agency reported.
But even if international sanctions on the country are lifted, it will take at least five years to ramp up production and build the pipelines necessary to become a large gas exporter.
It further said that Iran’s plans for exports of liquefied natural gas (LNG) will have to wait for a decade or longer to materialize due to the higher costs and the complexity of LNG projects.
“From 2005 to 2014 Iranian gas production increased nearly 70% to around 173 billion cubic meters (bcm),” the statement said.
The International Energy Agency (IEA) estimates that Iran currently exports only about 9 bcm to Turkey, Armenia and Azerbaijan.
Several significant gas projects in Iran are in different stages of implementation. Iran's share in estimated proven reserves of the giant South Pars gas field is about 14 tcm, while its current production capacity is only about 107 bcm.
The IEA expects 67 bcm of additional capacity to be commissioned at South Pars before the end of this decade.
Another major project is the North Pars field with estimated reserves of 1.3 tcm. The China National Offshore Oil Corporation signed a USD16bn deal to develop North Pars and build a 20 million tons per annum LNG plant.
Fitch in its statement also said that Iran’s consumption of natural gas has increased dramatically over the past years, rising 66% between 2005 and 2014 to 170 billion cubic meters (bcm). This rate of growth has been second only to China and has made Iran the world's fourth biggest gas consumer behind the U.S., Russia and China.
“We therefore expect a significant part of the newly commissioned capacity over the next few years to continue serving the domestic market,” it added.
Fitch said that Iran is planning a number of gas export pipelines pending the removal of international sanctions. One example is IGAT-9, a 35 bcm per year pipeline that Iran plans to use to send gas from South Pars to Europe via Turkey.
Fitch in its statement said there are currently no transit pipelines in Turkey to deliver gas to the European markets. The only pipeline currently under construction there, the Trans-Anatolian Natural Gas Pipeline (TANAP) is scheduled for completion by 2019 and would bring 10 bcm of Azeri gas via Turkey and Greece to Italy via another yet-to-be-constructed Trans Adriatic Pipeline (TAP).
While it may be possible to increase the throughput of TANAP and TAP to accommodate Iranian gas by building one or several gas compression stations, we estimate that such construction as well as gas production ramp-up in Iran could take several years.
Fitch in its conclusion emphasized that Iran could become a large gas exporter by the end of this decade at the earliest.  Developing LNG capabilities is more costly and would probably take longer, and we do not expect Iran to export large volumes of LNG before mid-2020s.
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