Arab Petroleum Investments Corp (Apicorp):
Iran to Invest Most in Gas Projects in 24 Years
DUBAI (Dispatches) -- Investment in natural gas projects across the Middle East and North Africa will rise, even as the coronavirus pandemic damps demand for the fuel, according to Arab Petroleum Investments Corp.
Gas projects planned or under development in the region will require around $211 billion in investment between 2020 and 2024, the multilateral lender said in a statement. In its previous investment outlook, Apicorp estimated that spending would total $185 billion between 2019 and 2023.
Expansion of output in Qatar, the biggest exporter of liquefied natural gas, will account for $22 billion of planned investment, Saudi Arabia-based Apicorp said. Iran and Saudi Arabia are set to see the most activity, with almost $90 billion of planned and committed investment between them by 2024.
Middle Eastern states are lining up new gas projects while cutting oil-related investments, though the pandemic has battered prices for both fossil fuels. This is partly because governments are promoting the use of gas to produce electricity instead of crude, a more polluting alternative.
The battle to secure LNG buyers will become "fiercer” over the next two or three years, and some producers may opt to consume more gas at home if global prices for LNG remain low, Apicorp’s Chief Economist, Leila Benali, said on Bloomberg TV.
"The key question is how you monetize the gas -- whether you export it or consume it domestically,” Benali said. "A player should go where it can get the most monetization for the fuel that it’s producing.”
State-run companies and entities account for as much as 92% of investments in the region’s gas projects, according to Apicorp research.
With more than 34 trillion cubic meters under its belt, Iran owns the world’s largest natural gas reserves but its share of the global trade in gas is less than one percent. Economists say natural gas will be the main fuel in the next 20 to 30 years.
Iran has significantly boosted production in recent years despite sanctions imposed by the United States on the country’s energy sector.
Growing production has become possible thanks to massive development plans in the sprawling South Pares gas field, the world’s largest gas reserve which is shared between Iran and Qatar in the Persian Gulf.
On Tuesday, Minister of Petroleum Bijan Zangeneh said the outbreak of the coronavirus did not halt Iran’s oil production for even one day, the Ministry of Petroleum’s Shana news outlet reported.
Zangeneh touched on his ministry’s measures to maintain production and protect its personnel.
"The Ministry of Petroleum was one of the first bodies to take the lead due to the sensitivity of its activities and the impossibility of shutting down oil activities,” he said. "If oil and gas are not produced, electricity and water will not be produced either,” Zangeneh said.
Officials say Iran’s total gas production is set to break through one billion cubic meters per day by next year. Total consumption by households normally hits record highs of 600 mcm a day during the winter.
Zangeneh said recently that more than 95 percent of all households in Iran would have access to natural gas once the current administrative government leaves office in August 2021.
For now, Iran’s only major gas customers are Turkey and Iraq. The deal with Turkey dates back to 1996, meaning it is not targeted by sanctions.
But the Islamic Republic cannot easily repatriate its funds from Iraq where Iran’s money from exports of gas and electricity was once said to have piled up to $5 billion in a bank account.
Head of the Central Bank of Iran Abdolnaser Hemmati traveled to Baghdad Monday, announcing later in the day that an agreement had been reached with Iraqi officials to unlock Iranian funds.
The deal, he said, allows Iran to use accumulated payments from energy exports to buy essential goods from Iraq.
Gas projects planned or under development in the region will require around $211 billion in investment between 2020 and 2024, the multilateral lender said in a statement. In its previous investment outlook, Apicorp estimated that spending would total $185 billion between 2019 and 2023.
Expansion of output in Qatar, the biggest exporter of liquefied natural gas, will account for $22 billion of planned investment, Saudi Arabia-based Apicorp said. Iran and Saudi Arabia are set to see the most activity, with almost $90 billion of planned and committed investment between them by 2024.
Middle Eastern states are lining up new gas projects while cutting oil-related investments, though the pandemic has battered prices for both fossil fuels. This is partly because governments are promoting the use of gas to produce electricity instead of crude, a more polluting alternative.
The battle to secure LNG buyers will become "fiercer” over the next two or three years, and some producers may opt to consume more gas at home if global prices for LNG remain low, Apicorp’s Chief Economist, Leila Benali, said on Bloomberg TV.
"The key question is how you monetize the gas -- whether you export it or consume it domestically,” Benali said. "A player should go where it can get the most monetization for the fuel that it’s producing.”
State-run companies and entities account for as much as 92% of investments in the region’s gas projects, according to Apicorp research.
With more than 34 trillion cubic meters under its belt, Iran owns the world’s largest natural gas reserves but its share of the global trade in gas is less than one percent. Economists say natural gas will be the main fuel in the next 20 to 30 years.
Iran has significantly boosted production in recent years despite sanctions imposed by the United States on the country’s energy sector.
Growing production has become possible thanks to massive development plans in the sprawling South Pares gas field, the world’s largest gas reserve which is shared between Iran and Qatar in the Persian Gulf.
On Tuesday, Minister of Petroleum Bijan Zangeneh said the outbreak of the coronavirus did not halt Iran’s oil production for even one day, the Ministry of Petroleum’s Shana news outlet reported.
Zangeneh touched on his ministry’s measures to maintain production and protect its personnel.
"The Ministry of Petroleum was one of the first bodies to take the lead due to the sensitivity of its activities and the impossibility of shutting down oil activities,” he said. "If oil and gas are not produced, electricity and water will not be produced either,” Zangeneh said.
Officials say Iran’s total gas production is set to break through one billion cubic meters per day by next year. Total consumption by households normally hits record highs of 600 mcm a day during the winter.
Zangeneh said recently that more than 95 percent of all households in Iran would have access to natural gas once the current administrative government leaves office in August 2021.
For now, Iran’s only major gas customers are Turkey and Iraq. The deal with Turkey dates back to 1996, meaning it is not targeted by sanctions.
But the Islamic Republic cannot easily repatriate its funds from Iraq where Iran’s money from exports of gas and electricity was once said to have piled up to $5 billion in a bank account.
Head of the Central Bank of Iran Abdolnaser Hemmati traveled to Baghdad Monday, announcing later in the day that an agreement had been reached with Iraqi officials to unlock Iranian funds.
The deal, he said, allows Iran to use accumulated payments from energy exports to buy essential goods from Iraq.