Iran welcomes Russian participation in the $2.5 billion construction of a pipeline to transfer Iranian gas to Europe, a deputy oil minister says.
IGAT-9 is a 35 billion cubic meter per year pipeline that Iran plans to use to send gas from its giant South Pars field to Europe via Turkey.
Russian companies have indicated interest in Iran’s gas development projects, with state-run Gazprom recently signing a letter of intent with the National Iranian Gas Company (NIGC).
“We are welcoming Russians’ participation in the project to build Iran’s IGAT-9 with $2.5 billion of investment,” Deputy Minister of Petroleum Hamid Reza Araqi said in remarks published by the Mehr news agency on Monday.
Araqi said Iran has raised gas production to about 700 million cubic meters per day, adding this capacity is expected to pass 1 billion cubic meters next year when new South Pars phases become operational.
“In tandem with the rise in production capacity, the country’s capacity for storage and transportation of gas must also increase,” he said.
Araqi touched on plans to build more high-pressure gas pipelines and gas compressor stations, including the 1,900-kilometer trunk line to carry about 110 million cubic meters of gas per day from southern Iran to the country’s north for exports to Europe.
“The Russians can participate in the construction of this pipeline but NIGC’s priority is to hold international tenders for the project,” he added.
Gazprom and NIGC have already signed MoUs for building high-pressure units and gas storage facilities as well as for implementing joint projects in neighboring countries and marketing.
Iran with its 34 trillion cubic meters (tcm) of natural gas reserves, or around 18% of the world’s total, has the potential to become one of the top gas producers.
The country exports about 9 billion cubic meters of gas a year to Turkey and also swaps gas with Azerbaijan and with Armenia for electricity while it imports from Turkmenistan for use in its northern provinces.
One key challenge, however, is a dramatic rise in domestic gas consumption which has made Iran the world’s fourth biggest gas consumer behind the US, Russia and China.
Several gas production projects are in various stages of implementation mainly the development of the giant South Pars field.
Another major project is the North Pars field with estimated reserves of 1.3 trillion cubic meters. In 2006, China’s CNOOC signed a $16 billion deal for the development of the North Pas field and build a four-train LNG facility with a 20 million tonne per year capacity. The agreement has yet to be finalized.