It seems it was not enough that the feasibility of Iran producing and exporting liquefied natural gas (LNG) to Europe had been diminished by technological factors and market situations, US President Donald Trump’s newly adopted Iran strategy shows to be able to further taper chances of a gas business between Iran and European countries, an energy and political risk expert says.
With 33.5 trillion cubic meters of natural gas, Iran has the largest conventional gas reserves in the world.
Along with its vast oil reserves, it also has sizable, non-associated conventional gas resources that are being developed aggressively. Officials recently said that gas exports grew by 64 percent during the period of March 21 to Aug. 22, 2017, compared to the same period in 2016.
"Since the easing of international sanctions by the Obama administration, the energy markets have been anticipating an entry of Iranian resources, likely LNG, to the markets, which would have been particularly significant for Europe," Dr Agnia Grigas, an Oxford graduate, told Trend October 18.
Iran is richly endowed with natural resources, particularly natural gas, she noted, adding however, that the Trump administration’s new strategy dims the prospect of any Iranian gas export to Europe.
Following the US shale revolution and with American LNG exports, Iranian gas exports had already become less strategically significant, much to the relief of the American gas sector.
Nevertheless, global LNG prices have declined by 45 percent since the beginning of 2017, compared to average prices in 2016. The decrease is due to an abundance of LNG in the global market, as well as to the link between natural gas and oil prices, which are also weak.
Back in May, Deputy Oil Minister for International Affairs and Commerce Amir Hossein Zamaninia told Trend that the EU’s gas market is oversupplied and exporting Iranian gas to that market would not be profitable.
Zamaninia noted that it would rather be in Iran’s interest if nearby markets were sought. In such circumstances, Russian natural gas monopoly Gazprom is strengthening its presence in the gas market of the Middle East through a planned construction of an 11-12 mtpy LNG plant in Iran. The plant will source gas from the South Pars gas field, Iran’s largest.
In line with that, Iran is going this week to sign a contract with the Norwegian oil and gas company Hemla Vantage to build Iran’s first floating liquefied natural gas (FLNG) unit in the Persian Gulf.
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