Iran to go ahead with plans to pump, export more gas

The country could award contracts to build a cross-border pipeline to Pakistan and develop another phase of its biggest offshore gasfield.

Iran is pushing ahead with plans to pump and export more gas, and could award contracts to build a cross-border pipeline to Pakistan and develop another phase of its biggest offshore gasfield in coming weeks. Tehran could award the main construction contract for a 2,100km gas pipeline to supply Iranian gas to Pakistan "maybe within a month", Seyed Mehdi Hosseini, the adviser to the managing director of Iranian Offshore Engineering and Construction, said on the sidelines of a energy conference in Abu Dhabi.

Most of contract terms and conditions had already been decided, he added, without disclosing the contract's recipient. Last week, the Iranian president, Mahmoud Ahmadinejad, and his Pakistani counterpart, Asif Ali Zardari, signed an intergovernmental framework agreement for the US$7.5 billion (Dh27.54bn) "peace pipeline" on the sidelines of a tripartite summit in Tehran that also included Afghanistan. Under the 25-year agreement, the pipeline would supply about 800 million cubic feet per day (cfd) of gas to Pakistan, which urgently needs the supplies to fuel power generation.

An expanded version of the peace pipeline, which would have brought Iranian gas to India, had been under discussion for 15 years. India pulled out of the project last year amid US opposition to the development, as a precursor to signing a nuclear trade agreement with Washington. Iran, which sits on the world's second-largest gas reserves after Russia and is also among the world's biggest oil producers, has been under US-led sanctions over its nuclear programme and its refusal to give up uranium enrichment, which Washington fears would allow it to develop nuclear weapons.

The sanctions have deterred western companies from investing in Iran, contributing to serious setbacks to Tehran's plans for developing the country's vast energy resources. Among the casualties have been proposals to develop exports of liquefied natural gas (LNG). In the meantime, the populous Gulf country's domestic gas demand has ballooned, further delaying prospects of Iran becoming a major gas exporter.

However, Tehran is now close to awarding an engineering, procurement and construction contract to develop phase 19 of the South Pars gasfield, Iran's part of the world's largest gas deposit, which it shares with Qatar. "It is to be awarded in the coming few days," Mr Hosseini told reporters in Abu Dhabi. Iran's Offshore Industries Engineering and Construction (OIEC) holds concession to develop phases 19, 20 and 21 of South Pars, all of which are slated to pump gas to supply Iran's domestic market. Phase 19 would produce about 1.5 billion cu ft per day.

Last week, OIEC's head, Roknoddin Javadi, said the company had signed an agreement to invest $5bn over four years to complete the development of phases 20 and 21 of South Pars. Seyfollah Jashnsaz, the chief executive of the National Iranian Oil Company, said the two project phases would produce about 1.77 billion cfd of gas for domestic use, 77,000 barrels of gas condensates for export, and 1 million tonnes per day of ethane, a natural gas component used as a petrochemicals feedstock.

Mr Hosseini said Iran still hoped to develop LNG production facilities without western partners, but the growth in domestic gas demand meant LNG exports were not a priority: "Our local market is so huge and growing that most of the gas is being consumed internally." @Email:[e-mail]