Iran's gas delivery to EU possible, but unrealistic now.

Iran's gas delivery to EU possible, but unrealistic now. (Taz).

Iranian officials say the country is keen to deliver natural gas to Europe. According to the head of National Iranian Gas Company Hamid Reza Araghi, European countries and Iran’s neighbors are willing to buy gas from Iran as more gas projects are coming online.

He said Iran would see its gas production reach 1 billion cubic meters a day (bcm/d) in three years as new phases of the gigantic offshore South Pars gas field are coming on stream.

Iran's current raw gas production level is reportedly about 660 mcm/d. The country has developed 10 phases of the giant South Pars gas field, which share about 8 percent of total conventional global gas reserves, while phases 12, 15 and 16 are commenced with half capacity.

South Pars was divided to 29 phases and the country is to increase gas production level to 720 mcm/d by the end of 2018 from South Pars.

"Although the we see South Pars’ gas production substantially rising over the coming years, we do not believe this (producing 720 mcm/d of gas) to be realistic in the near term," Homayoun Falakshahi, a Middle East Upstream Analyst for Wood Mackenzie told Trend on May 2.

He said gas production from South Pars will increase by 75% over the next five years, due to new phases coming on stream such as Phase 12, Phases 15-16 and Phases 17-18.

"These five phases will add around 64.5 bcma of production," Falakshahi said. "We estimate the whole field’s production capacity to approach 400 mcm/d come 2020."

Despite the progress at the South Pars and rising gas production, Iran is still needs more 20 bcm/a of gas delivery to its active power plants, while the gas re-injection level should double to above 60 bcm/a.

On the other hand, Iran has gas export agreement and memorandum of understandings with Oman, Iraq and Pakistan to export 40 bcm/a of gas to these countries in coming years. Currently, Iran delivers 9.76 bcm/a to Turkey.

Coming to the possible routes of gas delivery to the EU, Iran has to develop 9th cross-country pipeline, worth $6 billion, from South Pars towards Iran-Turkey borders.

Delivery gas from Iraq towards Syria and expanding this rout towards the EU seems impossible due to security crisis in the region.

Meanwhile, Stephen O'Rourke, a Research Director for Wood Mackenzie's Global Gas Service told Trend that "there is a possibility that this could happen."

"In order for Iran to deliver to the EU it would take an improvement in diplomatic relations, new pipeline capacity, and confidence from EU customers that Iran is capable to delivering agreed volumes," he said. 

 "This would most likely need the involvement of international oil companies or foreign national oil companies in the development of specific phases of South Pars which are ring-fenced for EU export".

EU put ban on gas import from Iran in 2012, but Tehran is negotiating with the P5+1 Gorup (the U.S., France, UK, Russia, China + Germany) to reach a comprehensive nuclear deal by June 30, which will pave the way for elimination of sanctions on Iran.


O'Rourke said that "the key factors here are the necessity of a nuclear deal and new, more attractive fiscal terms". Hmmm........Who want's to be depending on a bunch of crazy Mullahs?

Newly elected Ukranian president Poroshenko: "I’ll pay for gas, but I’m going to court over Crimea."

Newly elected Ukranian president Poroshenko: "I’ll pay for gas, but I’m going to court over Crimea."(RBTH).

A correspondent from the newspaper Kommersant got the opportunity to speak one-on-one with Petro Poroshenko. The conversation was muddled, but it was the first interview with the newly elected president of Ukraine

Will you pay for gas?
“For gas? Will we pay for gas? Of course we will, depending on the price.”

You insisted before on $268 per 1,000 cubic meters?
“I am not currently in the business.”

But you have a point of view.
“I think that the government of Ukraine isn’t obligated to do anything. We have business entities and we have agreements between business entities that are always changing; so whether $260, $460, or $550, it’s not a market price. I would like to pay the market price for gas. I don’t want to pay a political price.”

But right now the existing debt must at least be paid?

“Is there a debt for the seizure of our Chernomornaftogaz assets? Do you have to pay for those? You seized our Ukrainian wells, shouldn’t someone pay for that? The well yields gas. There are Ukrainian investments from the government budget in those wells. Who will pay? What do you think, shouldn’t someone pay? The wells are on the territory of the Kherson region. Paratroopers landed there.”Read the full interview here.

Europe's Energy Dependence on Russia Can't Last.

Europe's Energy Dependence on Russia Can't Last. Heritage.

Vladimir Putin is the father of the most significant energy mix shift in Europe. Ukraine may be the straw that broke the back of the energy camel.

As a result, Russia is about to lose a lot of revenue. Talk about the unintended consequences.

Even before Putin occupied the Crimea and supported separatist insurgency in Eastern Ukraine, the EU Commission began to seek ways to diminish the continent’s dependence on the Russian gas.

Today, the Old Continent brings 30% of their gas imports from Russia. But Central and Eastern European countries, from Bulgaria to Ukraine, are dependent on Russian gas for over 70% of their total gas consumption. That means, with literally a push of a button in Moscow, these countries can become dark and cold. In fact, this already happened in 2009 and may occur again.

So the EU fought back by promoting the Third Energy basket, which prohibits geographic destination of the molecules sold by Gazprom. The Basket also pushes back on gas production companies’ ownership of distribution networks, and promotes antimonopoly legislation.

However, the salvation will come from three directions: liquefied natural gas (LNG), the new sources of gas, and interconnectors. LNG is becoming competitive in the European markets, as suppliers from Qatar, Algeria, Nigeria and elsewhere smell the blood and are trying to claw away at the Russian market share.

It would be a great contribution to Ukraine’s search for energy diversification to put a floating LNG terminal in the Ukrainian port of Odessa, provided Turkey allows LNG tanker transit via the narrow and congested Bosporus Strait. In fact, under the Montreux Accord of 1936 it must allow shipment of “hazardous cargoes”—with necessary precautions.

By 2018 a wave of LNG and piped gas from the Eastern Mediterranean, including off shore Israel and Cyprus, is likely to reach Europe, while a pipeline from Azerbaijan called Trans-Anatolian Pipeline (TANAP) with an extension to Italy will be ready by 2015.

Interconnectors are short pipelines, which allow to shift gas from one regional network to another, considerably influencing prices. For example, Spain can bring lots of piped gas from North Africa as well as via LNG terminals, but it is lacking an interconnector pipeline to France and further east. North-South pipelines in Central Europe are crucial to push gas volumes from the LNG terminals along the North and the Baltic seas to Hungary, Czech Repubic, Slovakia, Ukraine and even Romania and Bulgaria.

Cheaper electricity from more abundant gas would be a triple blessing: it will diminish Central and Eastern Europe dependence on Russia; boost manufacturing and employment—a boon not just to the citizen of the continent, but to its trade partners including in the U.S. Finally, it will diminish emissions, something the “green” and environmentally conscious Europeans care about, while their governments shut down nuclear reactors; subsidize renewables beyond any economic reason; and allow increasing import of CO2 emission-rich coal.

Originally appeared in The Wall Street Journal.


The post Europe's Energy Dependence on Russia Can't Last appeared first on The Foundry: Conservative Policy News from The Heritage Foundation.

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