Nov 12, 2019 16:34 UTC
  • Iran: An LNG superpower in the making

Given Iran’s huge natural gas reserves, its new-found rapprochement with fellow gas supergiant Qatar, and Russia’s strategy to expedite the ‘Gas OPEC’ global supply and pricing cartel, Tehran’s plans to re-energize a long-stalled plan to establish dominance in the global liquefied natural gas market (LNG) makes perfect sense.

"There is still huge demand growth for LNG projected from Asia, and particularly China, in the next two decades, in addition to pipelined gas,” a senior source who works closely with Iran’s Petroleum Ministry told last week.

“Russia’s focus has always been and will remain pipelined gas – to Europe, where this is the basis of its ongoing political power – and to China – where this is the basis of its ongoing geopolitical partnership with Beijing,” he added. “If it [Russia] can also get its partners to corner the LNG side of the market, then basically Moscow will control the global gas market in its entirety,” he underlined.

Last week’s comment in this context by Talin Mansourian, the director of investment at the National Iranian Oil Company (NIOC) that Iran is looking at constructing six small LNG units – with a total 500,000 tons per year production capacity - in a dedicated facility belies the true scope of the plans envisioned.

“Back in 2015 – when the JCPOA [Joint Comprehensive Plan of Action] was first agreed in principle, Iran’s aim was to build five major LNG plants by the end of the Iranian calendar year 2018 [ending on 20 March] but when the US withdrew from the deal [JCPOA] last May these plans were put on hold,” said the Iran source.

“They were then modified to include a phased approach, whereby Iran would roll out a few smaller units to test the waters and then proceed to building major LNG plants in the second phase,” he added.

“This was part of the wide-ranging discussions last year between [Iran’s Petroleum Minister, Bijan] Zangeneh and senior officials from Russia’s state gas giant, Gazprom, including [its chairman and CEO] Alexey Miller, which culminated in the signing of two MoUs [memoranda of understanding] between the NIOC and Gazprom,” he highlighted.

Gazprom – which already supplies nearly one third of all of Europe’s gas – specifically agreed with NIOC a two-fold strategy, with the first concerning a gas cooperation roadmap between the two companies, and the second about the construction Iranian LNG facilities in partnership with Iran’s Oil Industry Pension Fund.

The first part of this cooperation will be the completion of the smaller LNG units, which will presage the roll out of the bigger units. These smaller LNG units are extremely closely based on the designs and technology of a series of ‘mini-LNG’ complexes that were to have been funded and developed by various South Korean entities before the US sanctions hit last year.