Iran is concerned with marketing the country’s LNG

Iranian oil and gas officials are concerned with marketing the country’s LNG. Iran’s neighbour Qatar is very active in global LNG marketing thereby doubling Iranian anxiety. To this effect, Iran is pushing for construction of Iran-Pakistan-India gas pipeline to sell LNG to India in exchange for its engagement in development of three Iranian oil fields -- Jofayr, North Azadegan and Yadavaran. India will become a potential market for Iran’s LNG if an agreement is finalized.
Mehdi Hosseini, acting manager of the National Iranian Oil Company, speaks about the challenges Iran faces in its gas pipeline to India.

Question: What challenges has Iran to face in its construction of trans-Pak Indian gas pipeline?

Answer: We have planned to find a market for our gas exports and we should find the countries whose gas consumption is on the increase. Asia is a good market for Iran and we are focusing on the countries with growing gas use. These markets include China, India, South Korea and Japan. India is a good target but we should finalize deals with it. We are sure that both India and Pakistan can be good market for Iran’s gas and we are building a gas pipeline. But India and Pakistan have to settle their political disputes before this pipeline is built.
We have followed up certain mechanisms in view of a thaw in Indo-Pak ties. Iran, India and Pakistan will benefit from such a pipeline. India can purchase its required LNG at lowest possible cost while Pakistan can saturate its gas market and transit gas to reap revenues. Iran will also export its natural gas. It is a beneficial project and there is no reason not to do the job. Conditions have improved for talks on the project.

Question: What do we need for exporting LNG to India?

Answer: We should have access to eastern costs of India because it is impossible to construct any pipeline and we should export LNG to such regions. We have currently three LNG projects under way and we can produce up to 34 mm tpy. This is remarkable and we should think of potential markets.
India is a good option and we are negotiating a deal to this effect. Conditions included in the agreement should be adapted to the circumstances of each period of time.

Question: Have you reached any deal with India for LNG exports?

Answer: Currently we are bargaining on the prices. Our views are close but no deal has been thrashed out.

Question: Unacceptable prices are reportedly behind non-finalization of a deal. Is that right?

Answer: We cannot describe the prices low or high. We consider the prices low while India says they are high. We should reach an agreement and that is not difficult. We will do so when Indian petroleum minister visits Iran.

Question: Qatar is competing with Iran in marketing its LNG. Can this parameter affect Iran-India deal?

Answer: Finding a market for LNG is very difficult. Now we are proposing to India to purchase our LNG and develop three oil fields. We will not lose anything. It is also difficult to find good contractors for development of our oil fields. India is a good option. We are in fact killing two birds with the same stone.

Question: Will you let India develop the three oil fields through a tender bid?

Answer: We have to hold a tender. We do not let India impose its conditions on us. We are seeking markets for our LNG. Our agreement with China does not impose any extra condition on us. We will not give any special concession on our oil fields to find a market for our LNG. I give an example. Japan has agreed to provide Iran with $ 7 bn in loans in exchange for developing the Azadegan Oil Field. We have received the low-interest loans from Japan.
We have let China develop a section of the Yadavaran oil field and India may handle another segment.

Question: What sections are prioritised for using LNG in the country and what do you think about competition with Qatar?

Answer: A difference between our country and Qatar is that we have good domestic market for gas. We can meet our future demand. Qatar should only think of exporting its LNG. As a result the Persian Gulf sheikhdom has won a good share of the market. Moreover, our country has been under international sanctions while the American market is a good place for LNG. American firms like ConocoPhillips and ExxonMobil are involved in LNG deals.
We are facing such tight competition. We are also using gas in all sectors in a bid to protect the environment. We also inject gas to the oil fields at a rate of 80 mm cmpd. The figure should reach 180 mm cmpd and we need gas production. Phases 6, 7 and 8 of the South Pars Gas Field are developed for gas injection. Oil wells and energy-consuming industries like the petrochemical sector also require gas. We have six petrochemical projects under way in Assaluyeh Port and therefore we need to feed them.

Our cost prices are much lower than others who use liquid food for their petrochemical industries. The last recourse will be LNG exports. We are producing gas in South Pars in order to reach the level of exports. We arethe second largest gas producer in the world but our presence in the markets is very weak.
We should gain a good foothold in the global gas markets in order to have political and economic benefits. Our contribution to OPEC has let us be influential on many international affairs. Gas can boost our clout.