Iran to pipe gas to Iraq in March as LNG supplies to take years

Iran, with the world’s largest reserves of natural gas, will prioritise exporting the fuel through pipelines to neighbouring countries, starting with Iraq as early as this month, over shipping it by tanker to more distant markets.“We have a nearby market that hasn’t yet been covered,” Alireza Kameli, managing director of National Iranian Gas Export Co said in an interview in Istanbul. “While that market is there and there are customers, our first priority will be that.”Iran is seeking to rebuild its energy industry and boost sales of gas and oil after the removal in January of sanctions that deprived it for years of foreign investment and technology. The Arabian Gulf nation borders countries such as Iraq and Pakistan that want the fuel to produce electricity.Iran is also trying to push into a crowded oil market, in which a global supply glut led crude prices almost 40% lower in the past year. It plans to boost oil output and exports by 1mn bpd in 2016 and has signed supply deals with European countries.Iran will start selling 4mn cu m a day of gas to Iraq via pipeline later this month to supply power plants near Baghdad, Kameli said on Tuesday. He envisions sales to Iraq rising ten-fold and expanding to include the southern city of Basrah, without giving target dates for the planned increase.Iran also wants to boost exports to Turkey, though sales have been affected by a dispute over pricing, Kameli said. An international court of arbitration in The Hague awarded Boru Hatlari ile Petrol Tasima AS, Turkey’s state-controlled buyer also known as Botas, a discount effective retroactively to 2011, the Iranian oil ministry’s Shana news agency reported on February 2. Together with Oman, Iran has begun studies for the construction of an undersea pipeline to the north-eastern tip of the Arabian Peninsula. After about six months, the two countries will proceed to more detailed talks about exporting Iranian gas to Oman, Kameli said.Iran, which currently lacks facilities to export LNG, wants to use idle capacity at a facility in Oman to process raw gas into a liquefied form for sale, Shana reported on February 21, citing Kameli. By converting gas into LNG, producers can ship by tanker to markets not linked by pipelines. Once Iran has served its Gulf neighbours, it will look to sell LNG to more distant markets such as India and Europe, Kameli said.Iran targets completing a first LNG facility of its own within four years to export 10mn tonnes per year of the super-chilled fuel. It needs investors and partners for the liquefaction plant before it can seek buyers for any exports from the facility, Kameli said.