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By Trend

Iran’s economy is most probably going to become heavily reliant on gas, although gas already looms large in the country and has been a source of blessing for the government.

The International Energy Agency (IEA) has in its World Energy Outlook 2017 it made a strong statement of how big the potential of Iran’s gas industry is: "In our projections, Iran leads gas output growth in the Middle East, adding 150bn cubic metres [a year] to the region's gas supply in the period to 2040," the agency has said.

Last year, when asked by Trend what comprised the Iranian economy’s propelling sections, government spokesman Mohammad Baqer Nobakht put strong emphasis on petrochemicals, all of which is a gas-based business.

According to the Iran Petroleum Ministry, the proved natural gas reserves of Iran are about 1,201 trillion cubic feet (34.0 trillion cubic meters) or about 17.8 percent of world's total reserves, of which 33 percent is as associated gas and 67 percent is in non-associated gas fields. Iran has the world's second largest reserves after Russia. As it takes approximately 5,850 cubic feet (166 m3) of gas to equal the energy content of 1-barrel (0.16 m3) of oil, Iran's gas reserves represent the equivalent of about 216 billion barrels (3.43×1010 m3) of oil.

At present, Iran's gas production is around 200 bcmpy. Of this, less than 10bn cm/y is exported.

Meeting the growing domestic demand for gas is the priority for Iranian gas producers, especially because they have an eye on situations when, like the early 2010s, the country is under sanctions and relying on gas for running power plants, factories, vehicles, and warming buildings would be the safest approach.

But as output from South Pars expands and capacity starts climbing towards the forecast 350bn cm/y by 2040, the IEA anticipates "some export growth via links to Iraq and Oman, as well as further deliveries to Turkey and, much later on [in] the projection period, the start of a pipeline connection with Pakistan".

In July, Amir Hossein Zamaninia, Iran’s deputy oil minister for trade and international affairs, said Iran’s gas production would rise to 1 billion cubic meters a day by the end of the year from that time’s 800 mcmpd.

In the seventh month of the current fiscal year (September 23-October 21), gas power plants in Iran received a daily average of 196 mcm of gas. Iran has the world’s largest CNG-powered car fleet, near 4 million. Almost all cities and big villages in the country also use gas for warming.

Iran's gas production capacity in South Pars, the world's largest gas field in the Persian Gulf that stretches into Qatar's territory, has reached 575 million cubic meters per day. That constitutes nearly two-thirds of Iranian gas output capacity.

The country hopes to develop its South Pars deposit using the investment and technology of Total that became the first major Western energy firm to sign a deal after the lifting of economic curbs in January 2016.

Currently, Iran exports about 1 mcmpd of gas to its northwestern neighbor Armenia, according to a 20-year contract signed in 2004 and put to force in 2009.

Iran is also exporting about 30 mcmpd of gas to its other northwestern neighbor Turkey. This is based on an annually renewed contract.

Iran is also exporting about 14 mcmpd of gas to its western neighbor Iraq. Based on agreements, the exported amount should stay somewhere between 7 and 25 mcmpd.

The Ministry of Petroleum plans to increase Iran’s share of global gas trade to 10 percent, which would be 7 times the current volume.

Nevertheless, just this week Iran signed a contract with Oman over the export of 1.5 bcfpd of gas to Oman. The project is expected to go on stream by 2020.

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