Beyond Oil, Iran Mulls Ramping Up Gas and Electricity Exports

If and when Western sanctions are lifted, Iran plans not only to resume large exports of oil, but also gas, and is even considering expanding its sales of electricity to foreign customers within its reach.

Before the sanctions, which were imposed because of Iran’s nuclear program, the Islamic Republic exported an average of 2.3 million barrels of crude per day, but once the sanctions were tightened in 2012, that amount shrank to about 1 million barrels per day.

Now that Tehran has agreed to limit the nuclear program, the sanctions probably will be lifted in the near future, and Iran has said repeatedly that it intends to increase oil production to 500,000 per day immediately, and to 1 million barrels per day within six months. Eventually it hopes to at least double that volume to match its pre-sanctions output.

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So far, though, not much has been said about plans for other forms of energy. But now Azizollah Ramezani, the director of international affairs for the National Iranian Gas Co. (NIGC), said Iran plans to develop technology that would allow it to vastly increase its output of gas for export to China, Europe and India.

Under the sanctions, such technology wasn’t available to Iran, he said, but with the lifting of sanctions, new foreign investment in his country’s gas sector could lead to record production of gas, which would allow it to compete more capably in the European market with gas-export giants such as the United States and Russia.

“The United States is trying to export liquefied natural gas to Europe to reduce [Europe’s] dependence on Russian supplies,” Ramezani said, and added that Iran should do its utmost to acquire a share of that market, despite the doubts of some critics who say it wouldn’t be profitable.

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“Some claim that it is not economical for Iran to export its natural gas to Europe,” Ramezani said, “but this is not true.” He explained that the recent plunge in the price of oil has bolstered the market in gas and enhanced Iran’s position as an exporter.

As for competing with Moscow, Ramezani said, “Russia is currently exporting natural gas to Europe through a 3,000-kilometer [1,800-mile] pipeline,” and Iran can use a similar conduit for shipping gas to Europe.

Another technology that will be available to Iran once the sanctions are lifted would allow it to transform conventional power generators to efficiently produce electricity for export, rather than just exporting the gas itself.

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Veteran diplomat Kamal Kharrazi, a former foreign minister, said Friday in Tehran that Iran must put more emphasis on exporting electricity because it has a greater added value than gas and therefore mean greater profits for the country.

In fact, Kharrazi said, because Iran’s production of gas is now so low, it should import gas from neighboring countries such as Turkmenistan and re-export it, some of it in the form of electricity, a move that would have both strategic and economic benefits for the country.

Already Iran is the leading producer of electricity in the Middle East and ranks 15th among the world’s largest producers. It now exports electricity to Afghanistan, Armenia, Iraq, Pakistan, Turkey and Turkmenistan.

By Andy Tully of Oilprice.com

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