Thursday, 3 November 2011

Iran: LNG still a priority

Several Iranian officials recently emphasised that the country still considers LNG a priority for its gas sector projects. This may indicate a shift in strategy as Iran's liquefaction projects have been shelved for a while, mainly as the result of sanctions that have banned investments in the sector. National Iranian Gas Export Company (NIGEC) managing director Hossein Bidarmaqz said Iran still has the development of Pars LNG and Persian LNG projects on the agenda. Bidarmaqz emphasised that Iran's foreign partners have not withdrawn from these projects but that they were shelved due to financial problems. The newly appointed NIGEC chief emphasised that abandoning the projects 'would generate losses for foreign partners.'

Although Total and Shell withdrew their LNG plans in Pars and Persian LNG schemes as the result of sanctions, the possibility exists that the two companies are still trying to keep the door open. Tehran seems to prefer a wait-and see approach until it can re-open talks with the companies to pursue previous plans. Considering the intense international climate against Iran and recent Western pressure to increase sanctions on the Central Bank of Iran and the oil and gas industry, however, it is fairly certain that the two majors won't return to the LNG projects as long as sanctions are in place.

Lavan LNG plan scrapped

On a related note, IOOC managing director Mahmoud Zirakchianzadeh said plans to develop an LNG plant at Lavan Island in the Persian Gulf have been scrapped. He noted that it had been decided to turn the project into a petrochemical plant. The feed for the project will be provided from the Lavan gas field, which is expected to yield 85 mcm/d.

For more news and expert analysis about Iran, please see Iran Strategic Focus.

© 2011 Menas Associates

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