Investment Opportunities Exist In Iran Natural Gas Industry

August 2013, Vol. 240 No. 8

Hedayat Omidvar, National Iranian Gas Company

The existence of 34 Tcm of natural gas reservoirs in the Islamic Republic of Iran along with experience from more than a century in the region has made the National Iranian Gas Company (NIGC) one of the most reliable active companies in the arena.

There are many advantages in addition to supply that bode well for participation and investment in natural gas production, transmission and underground storage sectors and the sale and export of gas and LNG in Iran. Those include the geopolitical climate, the availability of necessary infrastructure and the codification of laws and regulations that are in accordance with developmental plans.

It is obvious that with the discovery activities related to the common energy carriers such as oil, coal, nuclear and solar energy etc. for at least next 40 years, the dominant energy will be supplied by natural gas. Currently, the average consumption and production of this invaluable energy carrier has the needed stability on the international level. With NIGC having followed the prevailing national viewpoint, the country is ready to participate with national and international companies in the natural gas industry.

A glance at the administration and organization staff shows the NIGC is comprised of eight directorates: Financial Affairs, Planning, Research and Technology, Human Resource Development Gas Distribution, Natural Gas Distribution Coordination and Supervision (Dispatching), Production Coordination and Supervision Coordination, and International Affairs.

In addition, there are 13 departments which directly report to the managing director: Public Relations, Legal Affairs, Inspection and Complaint Consideration Affairs, Internal Auditing, Selection Kernel, Security, Assembly Affairs, Executive Affairs of Violation Investigation, Technical Inspection, Health, Safety and Environment (HSE), Information and Communication Technology, Commercial Expertise Affairs and Structural Engineering Affairs.

The subsidiary companies of NIGC are comprised of 54 subsidiaries active in different fields of natural gas industry with independent directorates. These companies include 31 provincial gas companies, which are responsible for gas delivery to the cities, villages, power plants, industries and commercial centers.

Iranian Gas Engineering and Development Company is one of the subsidiaries of the NIGC. Based on the executive system of oil industry projects, the company is responsible for the implementation of NIGC master plans. In terms of the volume of under implementation projects, the company is the biggest in NIGC and is responsible for more than 70% of the total planned investments.

The company is authorized to deal with the following tasks:

• Carrying out economic and feasibility studies of the projects left to the company.
• Carrying out fundamental and detailed engineering affairs and implementing all the projects left to the company.
• Design, supervision and implementation of all the engineering and construction operations, such as construction and development of oil and gas production, collection and transfer systems.
• Performing the required material procurement operations to provide the goods from inside and outside of the country.
• Performing the scientific, technical, financial, commercial and service activities needed to develop operations. The value of the plans under implementation is more than $20 billion with the total approved credit of the company about $4.1 billion in 2011.

Iranian Gas Transmission Company
The most important task of the company is receiving natural gas, ethane, LPG and gas liquids from domestic and foreign production sources and transferring it to domestic production terminals and export terminals. The Iranian Gas Transmission Company (IGTC) is comprised of seven managerial districts and 10 operational zones. The company is responsible for operation management of about 32,000 km of gas pipelines throughout Iran.

Gas Processing Plants
Gas processing plants act under the supervision of the production supervision and coordination directorate. This directorate supervises 13 gas processing plants companies. It is projected that by 2025 the number of the processing companies will be able to process 1,200 MMcm/d, provided all gas processing plants development projects are realized. The gas processing plants companies, which work under the supervision of this directorate, are as follows:
• Bidboland I and Masjed Soleyman with capacity of 28.1 MMcm/d
• Parsian with capacity of 82.5 MMcm/d
• Ilam with capacity of 6.8 MMcm/d, which will increase to 10.2 MMcm/d by 2014
• Fajr Jam with capacity of 110 MMcm/d
• Sarkhun and Qeshm with capacity of 16.5 MMcm/d
• Shahid Hasheminezhad with capacity of 49 MMcm/d
• South Pars with capacity of 208 MMcm/d, and
• Bidboland II with capacity of 57 MMcm/d, expected to be online in 2014.

Underground Gas Storage
Iranian Underground Gas Storage (IUGS) is another major subsidiary of NIGC, established in 2008 to build and maintain a balance between natural gas production and consumption in specific circumstances (sudden temperature drop). It also handles organizing, expanding, developing and speeding up underground gas storage activities in Iran. The company is responsible for developing ongoing projects and defining new ones.

IUGS started the underground gas storage in the tank of Sarajeh of Qom in 2006 and finished it in 2011 with gas injection. Moreover, earlier this year, the processing installations of the mentioned tank were launched and about 69 MMcm of gas has been delivered so far. The company is implementing numerous projects including Sarajeh, Shoorjeh, Yortsha, Nasrabad, Ghezel Tapeh and Mokhtar.

Natural Gas Underground Storage Plans

Iranian Gas Commerce Company
Iranian Gas Commerce Company (IGCC), as one of the other NIGC subsidiary companies, was established in 2008 to extract, produce, process, transmit and distribute energy. IGCC commerce activities include marketing, purchasing, sales, importation and exportation.

National Iranian Gas Export Company
National Iranian Gas Export Company (NIGEC) was founded in 2002 to spearhead natural gas export project development. In May 2010, the gas export activities via pipelines were separated from NIOC and transferred to the National Iranian Gas Company (NIGC).

NIGC Strategic Objectives
NIGC major objectives are divided into national and international sectors, both targeting customer satisfaction and maximum productivity. In line with this and based on the outlook document (2025 horizon), the NIGC aims at ranking third among the world’s natural gas producers, hoping to reach 8-10% of the global gas trade share. The second objective of the NIGC is ranking first in the region in terms of gas technology.

Plans and policies of the NIGC on international level include ranking third in the world and achieving 10% share of global natural gas trade through the following:

• Processing about 1200 MMcm/d of natural gas.
• Enhancing production capacity while prioritizing joint reservoirs, especially South Pars.
• Enhancing natural gas share in the energy basket of the country by 70% through substituting liquid oil products for natural gas.
• Exporting natural gas to neighboring through pipeline through LNG production.
• Attracting foreign investment through capital markets and joint projects.
• Improving structure to maximize profitability and competition in international markets.
• Maximizing value by using gas in energy consuming industries and establishing industries like GTL.
• Reinforcing private sector in downstream and gas distribution industries.
• Cooperating with the countries in the region in production and transmission affairs.
• Impressing gas management status in the region.
• Benefiting from natural gas adjusted pricing system.
• Completing privatization of the natural gas industry in Iran.
• Creating the required infrastructures for the development of gas industry in its upstream and downstream sectors, especially in the regions. The company plans interaction with the countries and companies, which own advanced technology.

Iran holds special advantages to enter the global gas market as well:

• shortest route to global markets
• having the huge infrastructures for transferring gas abroad
• need for only minimum investment
• possibility of transit to Turkey, Europe and Persian Gulf region countries
• possibility of gas swap to the adjacent countries
• existence of potential major consumers
• ownership of 34 Tcm of proven gas reserves, ranking the nation second among gas- owning countries
• ranking fourth among worldwide producers and expected to rank third in 20 years, and
• having necessary infrastructures for gas export and swap and transit to Europe, East Asia and Persian Gulf region countries.

Pioneer Investment Opportunities
Private sector participation enhancement in carrying out the infrastructure projects of the Iranian gas industry has been one of the strategic approaches of the NIGC during the recent years.

In this regard, using the capabilities of the domestic and foreign private sector in supplying the financial sources of the gas industry plans has created a new environment for the NIGC to interact with the private sector and has formed a win-win relationship for both parties.

Along these lines, relying on its successful experiences in the joint investment with the private sector and trusting the reliable capabilities and capacities in this sector, the NIGC has offered a vast range of investment options for the energy field investors in several sectors of this strategic industry including processing, transmission, underground storage and distribution ones.

The Research and Technology Directorate has created the necessary conditions to attract the domestic and foreign capital by developing added value and prosperity through science and technology. The NIGC welcomes the interest and participation of qualified applicants through the author.

Author:

Hedayat Omidvar is head of Communication Affairs with Science & Research Centers at the National Iranian Gas Company. He has worked as a natural gas consumption expert in corporate planning since 1992 in the areas of treatment, transmission, storage and distribution. Omidvar may be contacted at +98-21-81315646 or at omidvar@nigc.ir.

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