Iran Energy Comeback Won't Boost Global Natgas Supply Soon

  • Energy co. executives see Iran impact on market in 2030
  • Iran has highest reserves of natural gas in the world

As sanctions on Iran end, the nation is eager to enter the global natural gas market. The rest of the world won’t notice anytime soon.

Europe probably won’t feel the additional Iranian supply until at least 2030 as the country builds up its infrastructure and forges purchase agreements, according to energy company executives. Even as Europe seeks to diversify imports away from Russia, Iran still has significant hurdles to jump before becoming part of the continent’s supply mix.

After a decade of economic sanctions, Iran is cleared to resume global trade at a time when a global oil glut has driven natural gas prices to the lowest since 2010. The end of restrictions also opens the way for foreign investors to the world’s fourth-largest reserves of crude and biggest deposits of natural gas.

“In this price environment, it will be very difficult to encourage people to take the sort of political risks and the attached costs to it,’’ Andree Stracke, chief commercial officer for origination and gas supply for RWE Supply & Trading GmbH, said in an interview in Vienna. “There’s a long way to go.’’

Iran has 1,201 trillion cubic feet in natural gas reserves, BP Plc data show. Europe consumed 412 billion cubic meters (14.5 trillion cubic feet) of the fuel in 2014, according to the latest figures from Eurogas.

Building Routes

“We’re working as fast as we can to get our gas to Europe,” Mohammad Hassan Aboutorabi-Fard, deputy speaker in Iran’s parliament, said in Prague on Friday. “These are big steps and we’ll need to do a lot of planning and work to achieve tangible results.”

Iran doesn’t have any routes into continental Europe, so building export facilities will be a big part of its ability to compete. The country already has supply partnerships with neighboring countries including Turkey and Iraq and is in talks to build a $4.5 billion sub-sea pipeline to India.

“Once Iran will have the potential to become a net exporter, it will be a question of whether that gas will be piped gas or liquefied natural gas,’’ Reinhard Mitschek, senior vice president of gas transport international at OMV AG, said Wednesday at a gas conference in Vienna. “That’s an open point.’’

All of this will take about 15 years to sort out, Carlo Malacarne, chief executive officer of Italian gas network operator Snam, said in an interview in Vienna. Michael Maisinger, head of gas trading at Vattenfall Energy Trading, said Iran has enough gas volume to make a difference but that it’s too soon to say what will happen.

Iranian officials have estimated they need $62.5 billion of investment to develop the country’s gas industry. The country will complete all but one phase of its South Pars gas field in two years, Oil Minister Bijan Zanganeh said Jan. 11. Daily production at the Persian Gulf field will reach 700 million cubic meters a day.

Companies are already discussing how they can be part of any windfall from Iranian gas sales. Vienna-based OMV worked on two reservoirs in Iran before the sanctions began, CEO Rainier Seele said. Those projects form the basis for a renewed, “long-lasting’’ relationship with the country.

“The lifting of the sanctions is for all of us a big opportunity,’’ Seele told delegates at the Vienna conference. “We are hopeful but we should not cherish delusions. It will take time, time, time.’’

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