OGJ Focus: Iranian LNG, natural gas export plans outlined

April 12, 2010
This article reviews current projects for moving Iranian natural gas to regional and global markets.

This article reviews current projects for moving Iranian natural gas to regional and global markets.

Table 1 presents a summary of proposed and planned LNG projects as of 2010; Table 2, of proposed projects to move natural gas by pipeline.


• The project to establish a two-train liquefaction plant for Iran LNG is under way in Tombak, 50 km northwest of Asaluyeh and 15 km southeast of Kangan-Pars 2 (Tombak). This project consists of two phases: feasibility and execution.

Capacity of each liquefaction unit will be nearly 5.5 million tonnes/year and employ liquefaction technology from Linde. South Pars gas field, Phase 12, will provide feed gas for this plant.

Current shareholders consist of National Iranian Gas Export Co. (49%), Saving, Welfare, and Pension Funds of Petroleum Industry (a government agency; 10%), Petroleum Industry Pension Fund (1%), with 40% remaining available to other investors. Future shareholders will be NIGEC and Saving, Welfare, and Pension Funds of Petroleum Industry (20%), and outside investors (80%).

Responsible for upstream development is Pars Oil & Gas Co.; midstream responsibility lies with NIGEC. Companies that have applied to invest include OMV, E.On, Enel, EnBW Energie Baden-Württemberg AG, and Econogas.

Feed gas will be 27 million cu m/day; nominal LNG production will be 5.5 million tpy. The plant will also produce up to 260,000 tpy of propane, 196,000 tpy of butane, 210,000 tpy of condensate, and 133,000 tpy of sulfur.

Table 3 presents the plant's main characteristics.

• Pars LNG will produce 10 million tpy of LNG from two trains from gas containing nearly 46 million tonnes of sour gas supplied by South Pars gas field, Phase 11. Flow will be through two 32-in. pipelines and through molecular-sieve dehydration and mercury removal. Axens' LNG technology will be employed. LNG will be stored in two 155,000-cu m tanks.

It is noteworthy that a 1,000-Mw power plant utilizing combined-cycle gas turbines will provide power for the project. Project site will be 50 km northwest of Assaluyeh, Tombak village. Current shareholders are NIGEC (50%), Total (40%), and Petronas (10%).

Table 4 presents the plant's main characteristics.

• Work to build the two-phase Persian LNG project is well under way in the Tombak region, 50 km northwest of Asaluyeh and 15 km southeast of Kangan-Pars 2 (Tombak).

Phase 1 includes two units for sweetening and condensate extraction and one unit for LNG production. In Phase 2, more sweetening and condensate extraction and one more LNG train will be added.

Each LNG train will produce 8.1 million tpy, 16.2 million tpy in total. South Pars gas field, Phases 13 and 14, will provide the feed gas for the project totaling 78 million cu m/day.

Current shareholders are NIGEC (50%), Shell (25%), and Repsol (25%).

Propane production for Train 1 is projected to be 670,000 million tpy; Train 2 will be 1 million tpy. Butane production from Train 1 will be 370,000 tpy; Train 2 will be 560,000 tpy. Domestic gas production for Train 1 will be 3.1 million tpy; for Train 2 will be 200,000 tpy. Condensate production from Train 1 will be 290,000 tpy and 430,000 tpy from Train 2.

Table 5 presents the project's main characteristics.

• The North Pars project, at the port of Tombak, is based upon barter and counter purchase with a 7-year refund and is being developed with 52 tcf of gas reserves in North Pars gas field southeast of Boushehr. The gas will fill an LNG production plant to be constructed by China National Offshore Oil Co. in Tombak region in 2013.

This plant will consist of four trains, each with 5 million tpy of capacity totaling 20 million tpy. Half of the product belongs to NIOC for a 25-year term; CNOOC will pay NIOC the cost of the remaining gas upon concluding an agreement.

NIGEC is to sell CNOOC the feed gas on behalf of NIOC. All the equipment will be ceded to NIOC after 25 years.

CNOOC currently holds 100% of the shares, based on agreements instead of a tolling fee, with half of the LNG production belonging to NIOC. Plant ownership will be delivered to NIOC after 25 years.

Feed gas for the project will be 113.3 million cu m/day. Negotiations for the project began in 2006; project start-up targets 2014.

• Projects to develop Golshan and Ferdoussi fields southeast of Boushehr are based upon buy back with a 7-year refund through the sale of the fields' gas and by-products. Investment by Malaysian Petrofield Co. is expected to bring a two-train, 10-million tpy LNG plant into being at the port of Tombak.

Half of the production belongs to NIOC for 25 years. Petrofield will pay NIOC for the remaining gas upon conclusion of the agreement. NIGEC is to sell Petrofield feed gas to the LNG plant on behalf of NIOC. All the equipment will be ceded to NIOC after 25 years.

SKS currently owns 100%, based on agreements instead of tolling fee. Half of the LNG production belongs to NIOC; plant ownership will be delivered to NIOC after 25 years.

Feed gas for the LNG plant will amount to 56.7 million cu m/day. Project start was in 2007, with production start-up in 2015.

Exports via pipeline

The Persian pipeline project (exporting gas to Europe via Iran Gas Trunkline 9, IGAT9) was conceived so that Iran could have a larger participation in supplying natural gas to European markets.

Plans call for this pipeline to extend about 1,160 miles from Asaluyeh (South Pars gas field) to Bazargan on the Iran-Turkey border where other pipelines, possibly Nabucco (OGJ Online, Mar. 9, 2010), would carry the gas on to Europe. Exports are expected to reach 30-35 billion cu m/year.

Negotiations for gas sales are under way with Greece, Austria, Italy, Germany, and Switzerland, and are planned with France and Spain. This project is to be designed and executed with foreign investors and domestic contactors.

In addition to IGAT9, other gas export projects to Europe include a gas pipeline to Switzerland and a gas pipeline to Austria. The border crossing point would also be at Bazargan.

The pipeline to Austria intends to inject as much as 5 billion cu m/year of gas into markets in Northern and Western Europe and contribute to the Nabbuco consortium. This project was launched in 2006 with gas to be delivered following studies and pipeline construction.

Other planned or proposed gas export projects include pipelines to Pakistan (India-Pakistan-India), Kuwait, Oman, and Bahrain.

• Pakistan and India (IPI). The issue of exporting gas to India and Pakistan dates from 1990. Tensions between India and Pakistan retarded progress until early in this decade.

National Iranian Oil Co. embarked upon studies backed by international companies to build a pipeline route that best fits onshore, offshore, littoral lands, or deepwater. In so doing, Australia's BHP conducted the feasibility studies in 2003 that indicated onshore pipe construction as the superior alternative. As a result, NIGEC announced its readiness to deliver gas in Pakistan and to the Pakistan-India border.

The second course of tri-lateral talks chasing gas export to India and Pakistan began in 2003. Four companies took part in the talks: National Iranian Gas Export Co. representing Iran, Interstate Gas Systems Ltd. representing Pakistan, and Indian Oil Co. Ltd. and Gas Authority India Ltd. representing India.

Trilateral meetings at the level of the deputies of the ministries of oil and energy and some work teams from the three countries helped to obtain a price formula.

Feed gas for the pipeline would come from Assalouyeh field with 7-8 billion cu m/year targeted for Pakistan and 9-10 billion cu m/year for India. Targeted in service date is 2013-14.

• The agreement signed by the ministers of Iran and Kuwait in 2000 gave birth to a contract to export gas to Kuwait via pipeline. Accordingly, after talks concerning the allocated gas fields, methods of investment, and administration of feasibility studies, drafts of the contract and buy-sell Term Sheet for 2004 were signed by the two parties.

The two sides continued talks to finalize the contract, but drastic changes in the structure of the global price of energy led to disputes over pricing, governing rules, and price-revision mechanism, causing Kuwait to refuse to continue. Talks were discontinued.

Later correspondence between the two countries and Kuwait's letter on NIGEC's comments over the agreed-upon Term Sheet led to a second course of talks. In this round, which reconsidered the new formulas for gas pricing, Kuwait was provided with the amended draft of the Term Sheet and the talks are to be pursued.

Design and refining consultant engineers were in charge of conducting studies for the transmission of Iranian gas to Kuwait. It was agreed that Iranian gas would be delivered to a consortium consisting of Iranian and Kuwaiti international companies in Genaveh region.

In accordance with the contract, this consortium will deliver gas to Kuwait KPC Co. in Rasozoor, Kuwait. The consortium's framework of activity based on "build, own, operate" is to be devised.

Terms call for 1-3 billion cu m/year of gas from Assalouyeh will be delivered to Rasolzoor in Kuwait for 3 years following finalization of a contract.

• Another pipeline project aims to export gas to Oman and dates back almost 6 years. The countries signed three agreements in 2005 and 2006 in talks that paralleled negotiations concerning the expansion of Kish and Hengam gas fields by Iranian Offshore Co. and NIGEC with the Omani national oil company regarding feasibility studies to export gas as LNG. Thirty percent of the LNG belongs to Iran in return of the processing fee.

Due to some agreements over the price of the export gas and the Omanis low price proposal made the talks dormant and then the second course of talks began to reach a reasonable price for both parties. The issues—namely Oman's investment plan in Kish fields, transformation of Iranian gas to LNG, establishment of a Iranian-Omani joint company, price, and the formulas of Iranian gas—are all on the table in these ongoing talks.

Gas will be sourced from the Kish field at 10.2 billion cu m/year.

• Meetings between the oil ministries of Iran and Bahrain led to a feasibility study of exporting gas to Bahrain and for Bahraini investment on Iranian oil and gas fields. The first official meeting in 2007 in Bahrain helped the two parties reach general agreements.

Thereafter, in the second official meetings in 2007 in Tehran, the two parties finalized a memorandum of understanding signed by the two countries' oil ministers. Some joint meetings ended in conclusions at which the two parties had a flexible work arrangement signed in 2008. Bahrain will receive nearly 28 cu m/day and invest nearly $4 billion in Phases 15 and 16 in South Pars gas fields.

Requested delivery volumes will be 2-10 billion cu m/year to start in 2013.

The author

Hedayat Omidvar ([email protected]) is head of communication affairs in National Iranian Gas Co.'s Research and Technology Department. Since 1992, he has worked as a natural gas consumption expert in NIGC's corporate planning department, responsible for treatment, transmission, storage, and distribution of natural gas. Omidvar holds an MSc (2002) in industrial engineering. He is a member of the Institute of Industrial Engineers, American Industrial Hygiene Association, and Iran Institute of Industrial Engineering. He also serves on sustainable development and marketing committees of the International Gas Union.

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