Home' Trinidad and Tobago Guardian : July 23rd 2015 Contents BG8 ENERGY
BUSINESS GUARDIAN www.guardian.co.tt JULY 23 • 2015
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The historic deal
between Iran and the
P5+1 group (The US,
France, UK, Russia,
China and Germany)
has several oil majors
and oil refiners considering the impacts
of new Iranian crude hitting the global
"As soon as Iranian oil becomes avail-
able, we will certainly start buying again.
Motor Oil was always very fond of Iran-
ian crude," said Loukas Tripelopoulos
of Motor Oil Hellas SA. The removal
of international sanctions would be a
game changer for the Islamic Republic,
which has one of the world s highest
crude oil reserves.
Estimates vary, but Iran could pump
somewhere between 400,000 and
600,000 barrels per day over the next
year or so, which will enter a market
that is already oversupplied by around
2.6 million barrels a day.
However, it is not just the oil that
the Iranians can offer; the country has
the second biggest natural gas reserves
in the world.
Could Iran become a major gas
exporter in the near future?
Much like its oil sector, Iran s natural
gas industry has been adversely affected
by the US and European-led sanctions
that have restricted the flow of foreign
direct investment and the transfer of
Going by a recent report from Fitch,
Iran has close to 34 trillion cubic meters
of natural gas reserves, which is around
18 per cent of the total global natural
gas reserves. This means that Iran def-
initely has the potential to become a
major player in the natural gas market
once the sanctions are lifted. It is inter-
esting to note that, in spite of the west-
ern sanctions, Iran s natural gas pro-
duction grew in 2014 as another phase
of its largest natural gas field, the South
Pars, came online.
Does Iran have the necessary
infrastructure to meet the
growing demand for its gas?
Although Iran has one of the highest
global natural gas reserves, it contributes
merely one per cent to the total global
natural gas trade with almost 90 per
cent of its natural gas exports going to
Turkey, while the remainder goes to
Armenia and Azerbaijan.
Iran is at a strategic location where
it can benefit from the growing natural
gas demand from Asian countries like
India, China and Pakistan. It is therefore
planning a number of gas pipelines
once the sanctions are lifted.
One possible outcome of the deal is
the potential for Iran to play an impor-
tant role in the EU s future energy secu-
rity, as it could potentially join the 16
bcm Trans Anatolian Pipeline (TANAP)
that would run from Azerbaijan through
Turkey and Greece before connecting
with the Trans Adriatic Pipeline (TAP).
That could allow Iran to export natural
gas to Western Europe.
TANAP is projected to start delivering
natural gas in 2020, and Iran could use
this pipeline network for gas exports,
although it will require the construction
of infrastructure, such as gas compres-
sion stations. The necessary buildout
in infrastructure could mean that Iran
doesn t export gas to Europe for another
Could Iran set up cost efficient
A recent study made by Carbon
Tracker Initiative (CTI) found that the
energy industry s expectation from LNG
has been a bit unrealistic up to this
point. The study revealed that there
could be LNG assets worth US$283 bil-
lion that might not be needed over the
It stated that the majority of LNG
projects that would survive were the
ones that have already been built or
are under construction and there would
be little opportunity for greenfield LNG
projects. When we look at Iran, we find
that the state-owned National Iranian
Oil Company (NIOC) had started work-
ing on an LNG plant, but its work was
halted due to lack of financing and fail-
ure to purchase necessary foreign tech-
nology due to international sanctions.
The possibility of Iran setting up cost
effective LNG production looks bleak
as of now.
"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," said Fitch.
Nevertheless, Iran has some of the
largest natural gas reserves in the world.
Infrastructure constraints present an
enormous obstacle to large-scale
exports, but those could be overcome
with enough investment. India and
Pakistan present the most promising
market for gas exports in the medium
term, but even Europe is not out of
reach in the longer-term.
With a historic nuclear deal in hand,
Iran might just change the dynamics
of the global oil and gas sector in the
What the Iran
deal could mean
for natural gas
Iran has close to 34 trillion cubic meters of natural gas
reserves, which is around 18 per cent of the total global
natural gas reserves. This means that Iran definitely has the
potential to become a major player in the natural gas
market once the sanctions are lifted.
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