Iran, Oman Plan LNG Cooperation

A01186604.jpgTEHRAN (FNA)- Iran and Oman said they intend to seal a major gas deal by the year end that would allow export of more than 1 billion cubic feet of gas per day via pipeline. This would not only supply Oman’s needs, but also provide supply for liquefied natural gas that would belong to Iran.

A deal to develop the Kish field which may hold as much as 45 trillion cubic feet of recoverable gas was signed in April, but the final agreement had been delayed due to price wrangling. Yet, negotiations picked up after a recent visit to the Persian Gulf country by Iran’s Oil Minister Gholam Hossein Nozari.

Nozari struck the deal with Oman during his recent visit. Both countries are eager to finalize the agreement so production can begin by the targeted launch date in 2012. Oman would get the gas it badly needs to meet its export commitments and its soaring local demand. Iran would not only open new export routes to gas hungry Arab Persian Gulf countries, but also market a portion of its exports as LNG, which is more profitable and can be sold on the global market.

Oman has just 24 Tcf of gas reserves, compared to Iran’s 982 Tcf. It produces 2.3 bcf/d and demand is expected to increase by more than 25 percent by 2012.

Currently the Persian Gulf state exports about half of its gas via LNG, but growing demand means exports are expected to fall. In October, Oman is scheduled to begin importing 100 MMcf/d from Qatar via pipeline.

Iran, which sits on the world’s second largest reserves of both oil and gas, is facing US sanctions over its civilian nuclear program.

Iranian officials have dismissed US sanctions as inefficient, saying that they are finding Asian partners instead. Several Chinese and other Asian firms are negotiating or signing up to oil and gas deals.

Following US pressures on companies to stop business with Tehran, many western companies decided to do a balancing act. They tried to maintain their presence in Iran, which is rich in oil and gas, but not getting into big deals that could endanger their interests in the US.

Yet, after oil giants in the West witnessed that their absence in big deals has provided Chinese, Indian and Russian companies with excellent opportunities to signing up to an increasing number of energy projects and earn billions of dollars, many western firms are slowly losing reluctance to invest or expand work in Iran.

Some European countries have also recently voiced interest in investment in Iran’s energy sector after a gas deal was signed between Iran and Switzerland regardless of US sanctions.

The National Iranian Gas Export Company and Switzerland’s Elektrizitaetsgesellschaft Laufenburg signed a 25-year deal in March for the delivery of 5.5 billion cubic meters of gas per year.

The biggest recent deal, worth €100m ($147m, £80m), was signed by Steiner Prematechnik Gastec, the German engineering company, this month to build equipment for three gas conversion plants in Iran. This is at a time when France’s Total, Royal/Dutch Shell and Norway’s Statoil have put on hold their shares in multi-billion dollar contracts.

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