TEHRAN - Moscow and Tehran are taking serious steps toward forming an OPEC-style cartel for natural gas that would allow them to coordinate an ‘extraordinary’ proportion of reserves and control over prices, Oil Price reported.
“Occupying the number one and number two positions in the world’s largest gas reserves table, respectively – Russia with just under 48 trillion cubic meters (tcm) and Iran with nearly 34 tcm – the two countries are in an ideal position to do this,” the report stated.
It described the $40 billion memorandum of understanding (MoU) signed last month between Russia’s Gazprom and the National Iranian Oil Company (NIOC) as “a stepping stone to enabling Russia and Iran to implement their long-held plan to be the core participants in a global cartel for gas suppliers in the same mold as the Organization of the Petroleum Exporting Countries (OPEC) for oil suppliers.”
The chairman of Iran’s Oil, Gas, and Petrochemical Products Exporters’ Union, Hamid Husseini, reportedly said after the MoU had been signed: “Now the Russians have come to the conclusion that the consumption of gas in the world will increase and the tendency towards consumption of LNG has increased and they alone are not able to meet the world’s demand, so there is no room left for gas competition [between Russia and Iran].”
According to OilPrice, major global LNG supplier Qatar – which has the third-largest gas reserves of just under 24 tcm – could be a prime candidate to join the Russia-Iran gas cartel.
Together, Russia, Iran and Qatar account for just under 60% of the world’s gas reserves, the report pointed out. The three countries were instrumental in the founding of the Gas Exporting Countries Forum (GECF), whose 11 members control over 71% of global gas reserves, 44% of its marketed production, 53% of its gas pipelines, and 57% of its LNG exports, it said.
Iran, Russia to Sign Gas Swap Agreement
Iranian Petroleum Minister Javad Owji announced that in the very near future, the final gas purchase and swap contract from Russia will be signed between the National Iranian Gas Company and the Russian side in Moscow.
Owji made the remarks referring to his meeting with Igor Yevgenyevich Levitin, Aide to the President of the Russian Federation.
Saying that some negotiations were held following previous agreements in the field of energy and rail transportation, Owji added, “In the transportation sector, discussions were held regarding the construction of the Rasht-Astara railway line and the electrification of the Garmsar-Inche Burun railway line.”
He added that the financing obligations will be made by Russian banks, and since the senior aide to the Russian president has full authority, these projects will be operational soon.
Referring to the signing of a 40 billion dollar memorandum of understanding with large Russian companies, Owji noted, “These include memorandums and contracts; Now we have a contract with Russia for the development of seven oil and gas fields, which have a progress of between 10% and 30%, and negotiations are underway for 14 other fields.”
“The purchase and swap of gas from Russia has been finalized and will be signed in the near future in Moscow between the National Iranian Gas Company and the Russian side; Negotiations were also held regarding the swap of petroleum products; Iran has many capacities in the field of the sea, railway and land transportation for the development of swap,” he stressed.
He went on to say that the meeting of the Iran-Russia joint commission will be held in 2 months in Moscow, and negotiations will continue on various issues, including energy, transportation, trade, and even sports.
Referring to the fact that Russia will finance 5 billion euros in Iran’s projects and plans, he continued, “2.5 billion euros have been assigned and are even being implemented in power plant projects. For the rest of this amount, we also defined the plans, whose contracts will be signed.”
Emphasizing that the cooperation between Iran and Russia in the field of energy is not one-sided and that Iranian companies have great potency, the Iranian oil minister added that in the petrochemical industry, contracts for products and catalysts have been signed and the export of petrochemical catalysts to Russia has also started.
“Another issue emphasized in the signing of the memorandum with Russia is the discussion of increasing the pressure in the South Pars Gas Field because the Russians have good capabilities in this field,” he said elsewhere in his remarks.
Another challenge is the provision of financial resources, which Russian companies agreed to provide financial resources in the seven fields, according to Owji.
Iran to Set New Gas Production
Record at South Pars
Owji highlights the development projects underway at the South Pars gas-condensate field and says the country will set a new record this year in the volume of production at the key field shared with Qatar in the Persian Gulf.
This year, he added, Iran will break that record with the launch of Phase 11 of the South Pars gas field, completion of Phase 14 refinery, the repair of Phase 16 pipeline, the renovation of the existing wells and drilling new ones, and the overhaul of the 13A platform.
He added, “This winter, we will have early production from Phase 11 of South Pars with a volume of approximately 11 million cubic meters on a daily basis.”
South Pars is estimated to hold eight percent of the world’s total gas reserves and is considered to be the world’s biggest gas field by reserves.
“Today, 80 percent of Iran’s gas production and 30 percent of its oil production take place at joint gas fields,” he added.
Owji said his ministry had set up a committee, supervised by National Iranian Oil Company, tasked with directing development plans for energy reservoirs at oil and gas fields shared with other countries.
He said the country had already drawn up development plans for all of the shared fields.