August 2011, No. 61

Exclusive 16th International Oil Show

Application of natural gas as heating fuel is only part of the diversified effectiveness of this precious substance. The growing demand for gas to address energy and heating requirements as ell as the foreign currency obtained through selling and export of gas for investment and operation of major and infrastructural industries in the country, further strengthened the idea of centralizing activities related to the gas industry. In this connection and according to the legal statute the National Iranian Gas Company was founded in 1965 as one of the four main companies affiliated to the Oil Ministry of the Islamic Republic of Iran.

The company, since its inception up to date, in proportion to the trend of economic and social development of the country and application of gas as one of the important resources in supplying fuel and generating energy and in maintaining parts of the hard currency requirements gradually and through benefitting from capacities and capabilities and different sources and facilities including skilled manpower gained access to practical and theoretical knowledge and to modern machinery and facilities and numerous workshops for launching operations. Today the company is capable of operating independently all relevant affairs according to the latest creditable international standards.

Currently, the National Iranian Gas Company is one of the major 10 active companies operational in the field of gas at international level and one of the main four companies of the Oil Ministry with a record of 45 years. It is undertaking the responsibility of supplying over 61 percent of the domestic fuel demands. Therefore, the National Iranian Gas Company is enjoying an important status both inside and outside the country and in proportion to its requirements and expansion of its activities has taken necessary measures. The company is currently composed of six subsidiaries which are active in such fields as refining and dehydration, gas transfer, gas engineering and development, and commerce under independent management. Furthermore, 10 regions in charge of gas transfer and 31 provincial gas companies are operational under the supervision of the National Iranian Gas Company. NIGC is producing over 600 million cubic meters of gas per day which would be doubled in coming years, that is to say about 1200 billion cubic meters daily.

Currently some 80 million cubic meters of gas is delivered to the industries per day which shows an increase of 11 percent compared to the same period last year.

Deputy Oil Minister and Managing Director of National Iranian Gas Company Javad Oji speaking at a press conference answered questions with regard to the past activities and plans underway by the National Iranian Gas Company:

With regard to the nomination of the current year by the Supreme Leader as the year of Economic Jihad, what plans are underway for development of gas supply in the country this year?

Based on the targets of the Fifth Development Plan, the National Iranian Gas Company is obliged to connect all villages which have more than 100 households and whose distance from gas transfer pipeline is less than 15 m to the nationwide gas network. Therefore, in the light of the sound planning at the National Iranian Gas Company and support of the government, within the next five years the coefficient of gas influence among rural households would reach 70 to 75 percent and we hope we could take simultaneous steps towards realization of such targets with cities.

What would gas production level reach up to the year 1404?

Last winter over 600 million cubic meters of gas were transferred to gas pipeline per day which would be doubled in coming years, that is to say to 1200 billion cubic meters per day. However, unfortunately the major part of the produced gas is being consumed for household purposes which should be controlled through consumption management.

What is the amount of investment you need for implementation of projects of the company?

We need 70,000 billion rials for the implementation of programs of the company this year and generally speaking by the end of the Fifth Development Plan the company should make $37 bn investment which would be consumed in development and operational fields.

What programs have you included in the agenda for increasing share of gas in the world trade?

Given that in accordance with the scheduled plans Iran should hold 8 to 10 percent of the world trade share in the field of gas, including export, imports, swap and transit of gas and so far it has fulfilled 59 percent of its targets in the field of gas import-export, we would exert our utmost efforts towards realization of targets of the company in 2011 in order to reach our share of the world gas market.

In the field of gas imports, last year we achieved 78 percent of our goals and it is predicted that in the course of its Fifth Development Plan Iran could gain access to production capacity of about 900 million cubic meters daily and by the end of 2025 to about 1100 billion cubic meters per day.

Could you please elaborate on the latest gas supply in the country and the number of cities and villages that have been provided with natural gas?

According to statistics, by the end of the month of Farvardin this year (20 April), some 869 cities and 10,2230 villages were provided with natural gas and currently the coefficient of the influence of natural gas in the cities is 96 percent and in villages 45 percent.

Given that one of the sublime targets of the government in the area of eradication of poverty and supplying gas to the deprived areas and villages what are the plans of the National Iranian Gas Company in this regard?

In the current year’s budget, like in previous year, a significant legislation has been adopted to such an extent that in return for the sale of one cubic meter of natural gas 50 rials would be spent for supplying gas to rural areas which would further promote gas supply in those areas. We hope this year too we would be witness more villages benefitting from the natural gas.

How would you estimate gas conduit network in the country?

So far there are 190 thousand kilometers of gas distribution network and 33 thousand kilometers of gas pipeline network in the country and over 17.5 urban and rural households have benefitted from natural gas and the number is growing.

What is the figure for the gas delivered to power stations at the moment?

Right now the amount of gas delivered to the country’s power stations stands at 160 million cubic meters per day and the remaining fuel needed by power stations, about 20 million cubic meters, are supplied through other liquid fuel. However, the figure would rise to 190 million cubic meters by the next week which would be a remarkable increase as compared to the same figure in the past.

What is the amount of gas delivered to the industries right now?

Currently some 80 million cubic meters of gas is delivered to the industries per day which shows an increase of 11 percent compared to the same period last year. Some 17 million cubic meters of gas is delivered to CNG stands per day which shows an increase of 25 percent over the last year.

Would you please comment on the gas injection to the oil fields?

During the first quarter of the current year a daily amount of 12 million cubic meters of gas was injected to the country’s oil fields. The figure stood at 5 million cubic meters last year. Fortunately, the more the amount of gas injected in oil fields the less would be the production loss and furthermore, gas would be saved in those fields as well.

During the first quarter of the current year a daily amount of 12 million cubic meters of gas was injected to the country’s oil fields.

With regard to implementation of Article 44 (of the Constitution) and further activation of the private sector, what are the plans of the National Iranian Gas Company in this respect?

So far instructions for the ceding, development and exploitation of the gas supply network have been communicated to the private sector and on this basis efforts have been made since a year and a half ago. Based on the studies conducted in this regard a notebook has been prepared on the process of ceding the gas network to the private sector and distributed to gas companies throughout the country.

On this basis, private companies having contract with provincial gas companies throughout the country would receive natural gas at the entrance of each city or village and after going through the process the cost would be calculated on the basis of each cubic meter.

Could you please elaborate on steps taken by the company last year for the expansion of gas supply?

One of the major efforts taken last year in the constant transfer of gas in the winter was the official opening of the second gas transfer pipeline of the north and the northeast as well as the second transfer pipeline of Turkmenistan-Iran on 28 November.

Completion of the second Turkmenistan-Iran pipeline enabled us to increase gas imports from Turkmenistan from 20 million cubic meters to 40 million cubic meters per day. The pipeline in its first phase has a capacity of 20 million cubic meters per day which is capable of being extended up to 50 million cubic meters per day. In fact, the project in addition to increasing Iran’s export capacity from northwestern part to European countries would provide an opportunity for the big industries to consume gas in the cold seasons.

Furthermore, future gas requirements of northeastern part of the country especially provinces of Semnan, Mazandaran, Golestan, Khorasan Razavi, North Khorasan and South Khorasan would be supplied by the end of the 20-year vision.

The second gas transfer pipeline of Kerman with a length of 135 kilometers and a diameter of 30 inches is among other important pipelines that became operational last year. The pipeline is branched from the 42-inch Arsanjan-Sar Cheshmeh transfer pipeline in the vicinity of Pariz and finally ends in Kerman power station.

One of the important projects which was put into operation in 2010 thanks to the untiring efforts of our colleagues was the seventh nationwide gas transfer pipeline with the operation of which Iranshahr, as the first city in Sistan-Baluchestan Province, was supplied with natural gas.

Simultaneously with the launch of Iranshahr pipeline, operations were extended towards Chabahar up to Pakistan border while gas supply was implemented from Iranshahr to cities that are located along this route. On this basis, a daily export of 21.5 million cubic meters of gas to Pakistan as of 2014 was finalized.

The second phase of the nationwide seventh pipeline, a 400-km pipeline on Iranshahr-Chabahar and Iranshahr-Pakistan border, has been planned for gas export to Pakistan.

What contracts have been signed with other countries with respect to gas industry?

Negotiations were held with different countries in 2010 which were finally resulted in the signing of contracts or memoranda of understanding, including a new MoU between Iran and the Republic of Azerbaijan.

On the basis of the memorandum of understanding, Iran’s gas imports from this neighboring country would reach up to the ceiling of 2 million cubic meters per day which would increase to 5 million cubic meters per day in the second phase.

Among other important contracts which were signed last year was the new gas contract between Iran and Turkey according to which with the establishment of new Iran-Turkey pipeline grounds would be prepared for daily export of 50 to 60 million cubic meters of gas to Turkey and Europe during the next three years. The cost of the project would be above 980 million euro and share of Turkish companies in this project would be 77 percent while that of the National Iranian Gas Company would be 23 percent.

Would you please comment on the agreements reached between Iran and Lebanon and also Iran and Iraq in 2010 in the field of gas?

Iran and Lebanon reached general agreement for exploration of oil and gas and establishment of oil refineries and soon a quadrilateral meeting with the participation of Iran, Iraq, Syria and Lebanon would be held in Iran to discuss gas exports. In this meeting Lebanon too could offer its proposals on long-term purchase of gas from Iran if interested. Memoranda of understandings have been signed with Iraq on export of Iran’s gas to that country. The talks were held within the framework of a 5 to 7 year contracts according to which Iran’s gas exports to Iraq would be 5 to 10 million cubic meters per day.

How would you comment on Iran-Armenia gas relations in 2010 and what agreements have been reached between Iran and Russia in connection with gas industry?

Iran and Armenia held talks over a contract to barter Iran’s gas with Armenia’s energy according to which volume of Iran’s gas exports to Armenia would gradually increase and finally would stand at 2.300 billion cubic meters (6.300 million cubic meters per day).

During the last year’s visit to Russia of the Iranian officials of energy industry two documents on gas cooperation were signed between the two countries and the roadmap for Tehran-Moscow cooperation in the oil industry was signed between oil ministers of Iran and Russia.

The second gas transfer project of Khorramabad with a length of 123 km and a diameter of 36 inches was put into operation in December 2010. The pipeline with a capacity of transferring 14 million cubic meters of gas per day in addition to supplying gas requirements of the 100 megawatt power station which is currently under construction, would meet possible provincial demands of consumers in cold seasons.

Another major project which became operation last year was the installation of the biggest gas high pressure compressor (in Saveh) which is equipped with seven turbo compressors. The installations are highly effective in sustainability of gas transfer to the western and northern parts of the country.

What contracts were signed last year to supply the required credits for gas projects?

Last year the main contract of the gas industry was signed with Bank Saderat according to which the bank with a share of 80 percent would participate in construction of Bid-Boland II gas refinery and ethane extraction at Parsian Refinery.

The $4 bn contract stipulates that Bank Saderat by holding 80 percent of the share would invest $3.2 bn in the two projects for the construction of Bid-Boland II refinery and ethane extraction at Parsian Refinery.

The share of the National Iranian Gas Company is 20 percent and about $800 million.

How many contracts were signed last year for gas supply?

Over 90,000 billion rials worth of contracts were signed in 2010 in the form of borrowing, finance and partnership.

How many cities and villages were connected to the nationwide gas network last year?

Over80 cities and 1,406 villages were linked to the natural gas network last year. The company has also been ahead of schedule in supplying gas to the households.

How many CNG stands were connected to the gas network?

Last year in the course of every two days three CNG stands were connected to the natural gas network and in this period gas was transferred to 451 CNG stands throughout the country and 355 stands started operation.

How far the nationwide gas pipeline was extended last year?

In 2010 four gas pressure compressors were put into operation and the number increased to 68. By the addition of 1300 km to the nationwide gas pipeline, the length of the nationwide pipeline was increased to 33,200 km.

What other measures were taken last year with an aim to stabilize the country’s gas transfer network?

Increasing gas production capacity in Bid-Boland and Fajr Jam refineries through branches from the fifth nationwide pipeline was among important measures that resulted in increased sustainability of the gas transfer network in the country during the cold season. In this way, a daily 30 million cubic meters of sour gas from South Pars were refined in the two mentioned refineries as such that since the start of the project up to now a total of 4 billion cubic meters of joint South Pars fields has been received and refined by the mentioned refineries.

With regard to law enforcement on targeting subsidies, what measures the National Iranian Gas Company has taken in this respect?

In the light of the expanded measures adopted by the National Iranian Gas Company prior to the enforcement of the law and during its implementation, fortunately the least challenges were witnessed and fellow countrymen well cooperated with the government in this regard. The plan resulted in some 6 percent reduction in gas consumption.

What is the share of gas prices in the subsidies paid by the government?

Some 17 to 22 percent of the subsidies paid by the government go to gas. Therefore, fellow countrymen by adjusting their consumption patterns could remarkably economize in their costs.