The government long ago put two of its three big LNG projects on hold—Pars and Persian—because it couldn’t get the foreign capital and technology it needed. It said then it would instead focus on exporting natural gas by pipeline.
But it has kept one LNG project going and expects that to come on stream early in 2013. That is the Iran LNG project in Tonbak near Bushehr. The company says its has kept going by tapping domestic funds to beat international sanctions. It hasn’t said where the technology has come from, however. The company is 49 percent owned by the government.
“On the path we’re on now, we don’t have investment needs or technology needs,” Managing Director Ali Kheir-Andish said in an interview with Bloomberg news. “It’s a challenging objective, but we are making all the effort toward meeting this [2013] target.”
While it’s building or planning pipelines to export gas to regional neighbors such as Turkey, Armenia, Pakistan, India and Syria, the country wants also to develop the ability to produce the fuel in liquefied form for easier transportation to more distant markets.
Iran had aimed to start exporting LNG at least five years ago. Indian Oil Corp., a state-run refiner in India, discussed purchasing LNG as early as 2006. Zhuhai Zhenrong Co. of China agreed with state-run National Iranian Oil Co. to buy fuel starting in 2008.
“Of course, it is our ambition to be a top exporter, but that has to be in line with preserving our national interest and standing,” Kheir-Andish said. “We’re not going to make our people miserable and give nothing to local companies in order to export all the gas. Iran has lots of use for the gas domestically.”
Economic sanctions have discouraged investment. Royal Dutch Shell Plc, Europe’s biggest oil company, and Repsol YPF SA of Spain both pulled out of a project in Iran’s South Pars gasfield last year. China National Petroleum Corp. replaced Total in another South Pars project in 2009 after the French company postponed investment citing Iran’s strained relations with the West.
“Domestic banks have become partners in providing the investment needed,” Kheir-Andish, 46, said. Iran LNG has cost some $1.5 billion so far and will need a total investment of almost $5 billion upon completion, he said.
The company has secured the technologies it needs through contracts with foreigners, including companies in Europe, the executive said. He declined to identify the partners, however, citing concern that the US and its allies might take action against them.
“We have the technology needed at our disposal,” he said. “We concluded the contracts, and these are being executed.” There was much suspicion, however, that he was exaggerating and that Iran LNG does not have in hand all the technology it will require.
As for capital, the Indian media reported in 2009 that Iran had sought at least $1 billion in advance payments from Indian firms as part of a contract to sell India LNG starting in 2012. The Indians balked at that, and the contract has gone nowhere.
Iran LNG will produce 8 million tons of the fuel in its first year of operation and foresees potential annual output of 10.8 million tons, Kheir-Andish said.
Iran exported 5.67 billion cubic meters of gas in 2009, mainly to Turkey, and imported 6.17 billion, mainly from Turkmenistan, according to the BP Statistical Review of World Energy issued last June. Iran was the world’s third-biggest consumer of natural gas that year, after the United States and Russia, BP said.