Iran Seeks Bigger Share in World Gas Trading
In the second half-century of its work, National Iranian Gas Company (NIGC) has shifted its strategy from domestic development to international trading of gas. According to its Vision Plan 2025, it eyes a 10% share of global gas trading. To that end, the company has started intensive talks with neighboring countries for gas delivery to them. Iraq is set to receive Iran's gas and more countries would be getting Iran's gas in the future.
There are complaints that Iran's price of gas is high, but director for international affairs of NIGC, Behzad Babazadeh, insists that the price of Iran's gas is realistic. In an interview with "Iran Petroleum", he said that Iran would not export its gas below its real price.
The following is the full text of the interview with Mr. Babazadeh.
Q: Iran has signed two gas export agreements with Iraq to pump gas to Basra and Baghdad. At what stage are these two agreements now?
A: A 6-year agreement for exporting gas to Basra was signed in 2015 with the objective of supplying up to 35 mcm/d of gas to that area [of Iraq]. Under the agreement, Iran would be supplying 20 mcm/d of gas to Basra in cold seasons of the year and 35 mcm/d in hot seasons.
The final agreement for Iran's gas exports to Baghdad's power plant via Iran Gas Trunkline 1 (IGAT-1) was signed in 2013.
Both agreements are at a good stage of progress. We expect the agreement for gas export to Baghdad to become operational soon and exports to Basra would start in six months.
Q: Therefore, construction operation for gas export to Baghdad is over on the Iranian side, isn't it?
A: Yes, that’s so. As you know under the six-year agreement for gas export to Baghdad, Iran would be delivering gas to Iraqi power plants. At present, construction operations on the Iranian and Iraqi sides are over. The preliminary gas for the pre-commissioning of measurement systems and pipe test has been injected.
Q: How should the bills be footed for these agreements?
A: In the agreement, it has been mentioned that through opening an LC, the monthly sum would be paid in favor of NIGC. The LC issued by the Iraqi Ministry of Electricity in favor of NIGC must be renewable and certified.
Q: How much gas will Iran be exporting to Baghdad?
A: Gas delivery to Baghdad will start from 7 mcm/d, which will reach 14 mcm/d to 18 mcm/d in the second year, and will finally reach 25 mcm/d to 35 mcm/d.
Q: Has any price revision clause included in this agreement?
A: In all long-term agreements for natural gas selling and buying, a precise revision clause is included. But since the agreement with Iraq is initially valid for six years before being renewed conditionally such a clause is not included now, but it will be decided upon in a long-term agreement.
Q: In the wake of Turkmenistan's suspension of gas supply to Iran, NIGC demanded gas swap with Turkmenistan. Do you swap Turkmenistan's gas now?
A: As you know after Turkmenistan halted its gas exports to Iran, Iran has managed to supply gas to Northern provinces without any problem. But after that, since Iran and Turkmenistan are trading partners we suggested that Iran could swap Turkmenistan's gas. They agreed to send the same volume of gas they used to export to Iran before halting it for swap and we charge them for delivering their gas to other countries.
Q: You had also negotiations for gas delivery to Europe via Turkey. At what stage are those talks now?
A: Turkey had offered to transfer Iran's gas to Europe via its territory, but NIGC would sign a trilateral agreement provided that Iran's gas would directly go to Europe without being consumed in Turkey. We are currently in talks with influential Turkish companies, but we have yet to reach a conclusion.
Q: Has the volume of gas received from the Republic of Azerbaijan to be swapped to Nakhichevan changed?
A: No, it hasn't. The agreement for swapping the Republic of Azerbaijan's gas to the autonomous republic of Nakhichevan was signed on 5August 2004 for 22 years between National Iranian Gas Export Company (NIGEC) and the Azeri side. The agreement took effect in 2005. Iran receives Azerbaijan's gas via the border city of Astara and swaps it to Nakhichevan via Jolfa. In 2013 and 2014, some 400 mcm of natural gas was delivered each year from Azerbaijan to the autonomous Republic of Nakhichevan via Iran.