Iran is burning billions of dollars in unused natural gas as a symptom of the numerous economic sanctions set by the United States and European Union.
The sanctions passed down, in retaliation to Iran’s nuclear program, from the US and European Union has damaged the Persian economy by cutting crude exports in half since 2011, and they are trying to make exporting natural gas reserves, which is the world’s largest reserve. Mohammad Hossein Adeli, Iran’s former deputy foreign minister, was elected secretary-general of the Gas Exporting Countries Forum (GXCF). Adeli is aiming to turn Iran into a “major player” among the major gas exporting countries. The 13 member forum currently hold 60 percent of the global natural gas reserves.
In the week ended on October 28, liquid natural gas (LNGs) in the northeast Asian markets has reached $17.50 per million British thermal units (BTUs). According to the World Bank’s Global Gas Flaring Reduction Public-Private Partnership, in 2011, the last year data is available for, Iran burned 11.4 billion cubic meters of natural gas. In comparative terms, that is roughly a quarter of the South Korean demand and worth $7.3 billion in the Asian LNGs markets.
Neil Beveridge, an analyst at Stanford C. Bernstein, said Iran has the most at stake in the gas industry after Russia. This “must give them an interest in what happens with the price of gas longer term.”
Iran has the potential to become a top exporter of natural gas. Currently, the Persian country is essentially non-existent from regional and global markets and has to burn crude with natural gas due to the lack of infrastructure needed for transport.
Energy giants Royal Dutch Shell and Total SA abandoned projects that could have brought the know-how and monetary to export the gas from the country. Iran also has to set aside three of four LNG projects originally set out. The Iran LNG project that Iran will continue on with is expected to become a 10.5 million-ton-a-year facility along the Gulf port of Assaluyeh.
Deputy Adeli is looking to open up Iran to governments and global industry leaders which would have great benefit for Iran and foreign investors.
However, Adeli is hopeful. “We will try to cooperate with other exporters that are not a member of this forum as it is beneficial for all of us,” he said. It is more than likely if sanctions were less strict that Iran could potentially gain 10 percent of the LNG market space.