Iran to Sign Final Gas Sales Agreement With Pakistan

Source: BloombergBy Dinakar Sethuraman

March 11 (Bloomberg) — Iran, the world’s No. 2 holder of oil and gas reserves, will sign a final agreement to export gas via pipeline to Pakistan in April, an official from the National Iranian Gas Co. said.

Iran has completed half of the pipeline, which will have a capacity to carry 110 million cubic meters of gas a day to Pakistan, Vahid Zeydifard, a senior pipelines expert at National Iranian Gas, said in an interview at the Gastech conference in Bangkok today. Iran plans to start exporting gas to Pakistan from 2011.

The $7.4 billion project, known as the “Peace Pipeline”, will carry gas from Iran to Pakistan and India to meet the growing energy demand of the two countries. The U.S., seeking to isolate Iran because of its pursuit of a nuclear program, wants India and Pakistan to pull out of the project.

“Negotiations are at a final stage,” Zeydifard said. “Pakistan needs 50 million cubic meters of gas a day, and we can supply the rest to India if they want it.” India currently uses about 108 million cubic meters of gas a day, according to BP Statistical Review of World Energy June 2007.

Iran is unable to commission gas export projects either via pipeline or in liquefied form because U.S. sanctions are preventing international lenders and investors from releasing funds, Zeydifard said. Pakistan is facing a shortage of gas as domestic fields decline and may have to depend on Iranian fuel to meet demand, which is expanding by 5 percent a year.

The U.S. sanctions and coming presidential elections in America make it difficult to take a final investment decisions on gas projects in Iran, Yves Cerf-Mayer, vice president of LNG Marketing North East Asia at Total SA, said at the Bangkok conference. Total has delayed a decision to invest in the South Pars LNG project in Iran.

India has yet to agree on pipeline gas imports from Iran via Pakistan because it wants to resolve “pending issues” with its South Asian neighbor, the Iranian Oil Ministry said on Sept. 26.

Iran and Pakistan have agreed on the pricing formula for transporting natural gas through the proposed pipeline, the official Islamic Republic News Agency reported on Oct. 23.

The National Iranian Oil Co. is developing the Kish field, which will transport gas via a 900-kilometer (410 miles) pipeline from Assaluyeh to Iranshar once it is completed, said Zeydifard, whose company transports gas in Iran.

“Pakistan can start receiving the gas when Iran completes a 400-kilometer section from Iranshar to the Pakistani border,” Zeydifard said.

Iran halted gas exports to Turkey in January to meet soaring domestic demand due to extreme winter weather.

“We have started exporting gas to Turkey again,” said Zeydifard. “We had supply problems because of the cold weather and disruption of gas supplies from Turkmenistan.”

Turkmenistan stopped exporting 25 million cubic meters of gas a day to Iran as it wants to charge more for the fuel, Zeydifard said. Iran sells gas domestically at 20 cents a million British thermal units. The benchmark gas price at Henry Hub, Louisiana, a gas trading point, is $10 a million Btu.

Iran may increase exports of gas this year to Turkey by 30 percent to 10 billion cubic meters, Zeydifard said.

 

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