-------------- Storage projects   To overcome seasonal fluctuations in consumption, installation of underground gas storage has been recognized as the best choice. Three underground storages are under study, with some degree of progress, to ensure natural gas supply to internal users and export destinations.

  National Iranian Gas Company (NIGC) has also identified several reservoirs that might be converted for underground gas storage. One of them is Sarajeh gas and condensate field, about 40km east of Qom, whose production rates have been restricted by surface equipment for about 45 years. NIGC believes that by working over old wells and drilling new ones it can deplete the reservoir in two years and convert it to storage. Another prospect for gas storage is the Yortsha Dome saltwater reservoir 25km south of Varamin. NIGC has acquired 2D and 3D seismic data over the reservoir and plans to drill vertical and horizontal wells to prepare it for storage. Another saltwater reservoir under study for use as gas storage is the Talkheh Dome in central Iran, which also contains negligible amounts of light and heavy hydrocarbons. A single well drilled in 1960 found the structure. NIGC has 2D seismic data from the area and plans a 3D survey.  
Other areas that NIGC thinks might have reservoirs amenable to gas storage are in the provinces of Abardejno, Siahkuh, Marehtapeh, Parandak, and East Azarbaijan.  
Expansion of Iran’s gas industry follows a strategy in place since the early 1990s to displace oil with gas in domestic consumption. In 2002, gas moved ahead of oil in Iran’s total energy consumption. Gas now claims 70 percent and oil, 30 percent of Iran’s overall primary energy use.  
---------------- Export markets
  The strategic role of the Persian Gulf and the huge amount of gas reserves in this area have provided a good opportunity for Iran to export gas to consuming countries through pipeline or in the form of LNG. NIGC believes pipeline exports can reach 44 bcm/year in 2009 and 110 bcm/year by 2020. Besides Turkey, potential customers for Iranian gas include Ukraine, Europe, India, Pakistan, Armenia, Azerbaijan, Georgia, and China. NIGC is targeting LNG exports from three planned liquefaction projects to China, Thailand, and India of 35 mcm/day in 2009 and 180 mcm/day in 2020. Assaluyeh and Kish Island have been named as possible LNG export terminals.  
Oman and Iran have signed an agreement to develop offshore gas fields in Iran and take the gas to Oman. The gas from the joint Bukha-Hengam and other fields would be converted into LNG at Oman’s Qalhat LNG plant and marketed as exports by a joint company. The agreement also calls for joint petrochemical projects.  
Bahrain has started discussions with Iran over importing natural gas through a new pipeline by 2015. As part of its plans to meet the kingdom’s future electric power needs, Bahrain has implemented a twin-pronged strategy to boost gas supply. This involves both increasing domestic output and negotiating import agreements with its gas-rich neighbors.  
The project for transferring gas to Europe is also economically attractive and will benefit all parties involved. Turkey and Ukraine have been considered as alternative routes, but the former is less expensive. By the end of 2007, Iran expects to be exporting about 300 bcf/year of gas to Europe via Turkey.  
Since the discovery of natural gas reserves in Iran’s South Pars fields, the Iranian government has increased efforts to promote higher gas exports abroad. The prospects for profit are especially good in south Asian countries like India and Pakistan, where natural gas reserves are low and energy demand exceeds supply. Pakistan and Iran signed a preliminary agreement for the construction of a natural gas pipeline linking the Iranian South Pars natural gas field in the Persian Gulf with Karachi, Pakistan’s main industrial port. Iran later proposed an extension of the pipeline from Pakistan into India. Although India and Iran signed a memorandum of understanding in 1993 for a land-based natural gas pipeline, regional political and security concerns continue to block the completion of a feasibility study.  
--------- Import markets  
Apart from natural gas exports, Iran has also discussed importing natural gas from Azerbaijan and already imports it from Turkmenistan. This is basically for use in Iran’s northern areas, far from the country’s main natural gas reserves in the south.  
In December 1997, Turkmenistan launched the $190 million Korpedze-Kordkoy pipeline to Iran, the first natural gas export pipeline in Central Asia to bypass Russia. According to the 25-year contract’s terms, Iran will take between five and six bcm of natural gas from Turkmenistan annually, with 35 percent of Turkmen supplies allocated as payment for Iran’s contribution to building the pipeline. Iran’s gas imports from Turkmenistan will peak at eight bcm per year.  
Armenia and Iran have agreed to a long-term deal under which Iran will supply an annual 1.3 tcf of natural gas to Armenia over 20 years (starting in 2007) in exchange for electricity supplies from Armenia. The two countries will also build an 85-mile gas pipeline at a cost of more than $200 million (construction on the pipeline began in late November 2004). Armenia is also reportedly keen to receive credit from Iran for building hydroelectric plants on the Aras River in exchange for electricity supplies to Iran. These deals are expected to boost regional trade and cooperation between Iran and central Asian states.  
Iran’s gas industry now contributes the lion’s share to the country’s fossil fuel basket and it has entered an intense stage of development. For more than 40 years, gas has played a secondary role to oil. But the growing demand for natural gas in the residential and industrial sectors, along with surging export demand, have launched a new era. To respond adequately, Iran’s gas sector needs investments, especially in upstream development, technology transfer, and export and import facilitation. With or without foreign investment, Iran will be a key gas exporter for decades to come.
(Source: PIN)
(Concluded)