News ID: 217388
Published: 0333 GMT June 27, 2018

Oil official: Gas exports contracts, Iran’s strategy to counter US sanctions

Oil official: Gas exports contracts, Iran’s strategy to counter US sanctions

By Sadeq Dehqan & Farzam Vanaki

While by pulling out of the Joint Comprehensive Plan of Action (JCPOA) and placing countries under pressure to reduce their oil imports from Iran, the US seeks to create an economic bottleneck for Tehran, signing new gas contracts by the Middle Eastern state and increasing its in gas exports can foil Washington’s plots.

Currently, gas is among the energies on which the daily lives of many people and the survival of the many of the world’s economies depend. In case countries fail to meet their gas requirements, they will face several problems.

At present, millions of people all around the world are in need of Iran’s gas. The country sits on the world’s second biggest natural gas reserves. Even US strict unilateral sanctions against Iran has so far failed to prevent those countries having gas imports contracts with Iran from purchasing the hydrocarbon fuel from the Middle Eastern state and convince them to surrender to Washington’s demands.

Experts maintain that by signing new gas contracts with its neighboring states, Iran can change the condition at international level and the status quo in its domestic economy, in its favor. Apparently, Iranian officials have recognized the importance of this issue and plan to achieve a significant increase the country’s gas exports within the next two years, by preparing new contracts.

At the time being, the importance of gas exports for Iran is to the extent that, Nosratollah Seifi, a member of the Iranian Oil, Gas and Petrochemical Products Exporters’ Union, described agreements with other countries to that end as anti-sanctions contracts.

The former managing director of National Iranian Gas Exports Company (NIGEC), he further elaborated on the issue and its different aspects and dimensions in an exclusive interview with Iran Daily.

Excerpts of the interview follow:

 

IRAN DAILY: Can gas exports contracts be viewed as Iran’s trump card in the face of US sanctions given that Washington’s embargoes have so far failed to cover them?

NOSRATOLLAH SEIFI: Yes, definitely. Currently, gas exports can be among the methods to be used by Iran to counter US sanctions. One must not overlook the importance of this available, yet precious product. During the years prior to the signing of the JCPOA in which cruel US sanctions were in place against Iran, our gas exports to Turkey were not stopped even once. Turkey did not relinquish and sacrificed its rights and interests, respectively, to acquiesce to US excessive demands. Thus, I believe that, at present, gas contracts can be described as anti-sanction agreements.

Gas contracts are generally long-term deals. On the other hand, stopping gas supply is pragmatically impossible for a country that imports gas and whose people has gotten used to consuming pipeline gas, as the move endangers its national security. No country is willing to compromise on its national security with the US or any other state. This comes as, during the pre-JCPOA era the US had requested Turkey to stop its gas imports from Iran, but Ankara had refused to comply with Washington’s request due to the reasons cited above. Following that, sanctions on Iran have always somehow failed to cover Iran’s gas contracts with other states.

In case we continue entering into gas contracts with other states, such as Pakistan and India, our domestic economy will hugely benefit in the present situation. Such a strategy can also help ensure our national security.

 

What about the field of gas swap?

 

Our interests in this field is not simply limited to direct gas exports or sales. Iran’s geopolitical situation in the region is in a way that the country can turn into the region’s gas junction and regional hub. This is because Iran is located in a region in which most of the world’s major gas exporters are located. Iran can transfer these states’ gas from north to south and from east to west and help connect them with each other. This will both help Iran increase its security ratio and fetch the country substantial revenue through gas swaps. At present, gas swap can produce a four-cent income for Iran for each cubic meter.

Iran’s present gas swap capacity stands at 180 trillion cubic meters (TCM). Nevertheless, following the completion of the new projects underway by the NIGEC, this capacity will reach 400 TCM. Thus we will be able to transfer Russia’s gas to the south and the Persian Gulf, that of Turkmenistan to Turkey and our own production to Pakistan and Afghanistan through Turkmenistan.

 

How do you asses the present condition of Iran’s gas exports and swap?

As far as gas exports are concerned, Iran has a number of traditional markets among which the most important one is Turkey. Iran currently exports 30 million cubic meters of gas per day to the country. We have a gas imports contract with Turkmenistan as well, purchasing 25 million cubic meters of gas per day from that country.

For a certain period of time, we are in charge of swapping close to between two million cubic meters and six million cubic meters of gas between Turkmenistan and Azerbaijan as well as Azerbaijan and Nakhichevan.

We also have a contract with Armenia in the fields of gas and electricity exports, as well as barter.

We have signed two gas exports contracts with Iraq, each requiring us to send 35 million cubic meters of gas per day to our western neighbor. One of these contracts will be implemented in the year ending mid-March 2019, and the other one in the 12-month period to March 2020. As per these contracts, we have committed to supply gas to Iraq for six years.

Following the implementation of the new gas exports contracts, Iran’s overseas gas sales will triple.

 

 

   
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