One Step Closer for Europe-Iran LNG

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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--Europe's plans to import liquefied natural gas (LNG) from Iran are advancing according to Iran's Minister of Oil Bijan Zanganeh.

He confirmed that Europe will be a key market for Iranian exports as the region looks to diversify its gas sources and reduce its dependence on Russian supplies.

"The main objective is to transfer the Iranian product in the form of Liquefied Natural Gas (LNG)," Zanganeh told media.

Earlier this month Azizollah Ramezani, Director of the International Affairs Department at state-owned National Iranian Gas Company (NIGC) confirmed that talks had taken place with a leading German energy company with regards to LNG exports.

Iran has the second largest proven gas reserves in the world after Russia but only a tiny share of the world's gas trade. The country lags behind other regions in capitalising on its massive reserves and is actively pursuing LNG and other gas-related projects to exploit growing demand from its close neighbours, Europe and China. The Iran LNG project was the only LNG production project underway and was only 50% complete when Europe imposed sanctions over the country's nuclear development plans in 2007. Before the sanctions, as part of the country's five-year development plan, there were plans to produce 70 million tons of LNG annually by 2009 from the South Pars, North Pars, Ferdosi and Golshan gas fields which would be handled by six LNG production plants. .

The European Union (EU) and United Nations (UN) lifted sanctions in January, leading to a rush of western companies looking to get involved in the country's energy sector. The European Commission estimated that Europe could be receiving 25 billion to 35 billion cubic metres of gas from Iran--mostly LNG--by 2030.

Speaking this summer, Europe's Energy Commissioner Miguel Arias Cañete, on a visit Iran to boost political and economic ties with the country, said large volumes of LNG could be flowing into Europe in "three to four years" because Iran is looking to finish three LNG plants.

The country has no plans to build pipelines to Europe, Cañete, told media, "so that leaves LNG as the biggest possibility of starting to supply gas to the world markets and to the European market. Developing a gas plant doesn't take so much. For sure, it's not tomorrow...but for the medium term it is very clear that LNG will be a possibility. And that fits with the security and supply strategy of the European Union."

NIGC is now in discussions with six companies, some European, to secure the multi-billion dollar investment needed to complete the 10.5 million tonnes per annum (mtpa) Iran LNG plant. The winner will be announced in the coming months and hold a stake of up to 80%. The project was originally budgeted at $5 billion but this figure does not include the billions already spent on it before sanctions shut it down.

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