irangasIran has been off the world stage since 1979, except in a complex role where they willingly played devil and most everyone else enthusiastically applauded the drama, although rarely for the same reasons.  During this absence the world natural gas trade has been transformed everywhere else.  We didn't even have US natural trading in 1979.  LNG was a sleepy little sideshow where Japan enriched the Sultan of Brunei and a few others in in Indonesia and Malaysia. Norway only produced 20 BCM in 1979 against 114 in 2012. The UK produced 36, and is almost back at that level, but had produced over 100BCM as recently as 2003.  Qatar LNG didn't exist and of course not even George Mitchell was thinking about fracking.

In 1979 we still had a Berlin Wall, China was one of the world's poorest countries and even the Sony Walkman was still a couple of years away.  Even the high tech fax machine had yet to evolve.

In 1979 we had the other two political transformations of the 1990's, Northern Ireland and South Africa, still providing what the expert opinion saw as permanently unsolvable deadlock.

Thirty five years is just blip in geology. Could it be that people haven't had to think about Iran for so long that a simple geological fact is forgotten: Iran has the second largest proven natural gas reserves on the planet 33 Trillion Cubic Meters, second only to Russia's 48TCM and even greater than Qatar, which has transformed global gas via one relatively tiny (by area) reservoir which puts it  third at 25 TCM.  Qatar's wealth is built on it's two third's share of the South Pars/North Dome gas field, the largest single gas field in the world.  But Iran has gas where it also has oil and that means lots of other places.

Iran hasn't been totally cut off from western interest.  Until a few years ago, Iranian trucks were not an unknown sight on autobahns, and non-US oil companies were in a constant, if low key, dialogue.  Geologists, perhaps because they are so fascinated with the resources under the earth, rarely let the politics above it intrude.  Speak to any of them and there is barely a place on earth that they are unfamiliar with. 

The path to a modern era commercialisation of Iran's natural gas resources will be fraught, but it's not as impossible or unlikely as people think. The reason for this is that not only does Iran have huge gas resources in the earth, they are also coming out of it far sooner than people think. This is from a presentation by a good friend, John Roberts in Vienna last week. John knows more about Central Asian energy than anyone and has known about it for far longer.  He quotes from Bijan Khajehpour, an expert on Iran.

iran

The dates are important. BP 1981 estimates are where many people stopped thinking about Iran. By 2012, production increased, yet the the next export availability of Iran was still only 4.4. Yet BK's estimates show that Iran's success in growing domestic production for their own massive internal market (Iran is a world leader in gas transport for example) is such that there is going to be huge volumes available to export. Pakistan and on to India is one option. LNG will be a longer term play, but John Roberts thinks there will be well over 25BCM available to export via Turkey by as soon as two years from now. This will create all kinds of issue for everyone, as this recently discussed:

The appearance by Iranian President Hassan Rouhani at the World Economic Forum has raised this intriguing possibility: that the country that sits astride the world's second-largest pool of natural gas will emerge from diplomatic and economic purgatory to begin tapping this largely neglected resource.

The Islamic Republic of Iran is prepared to engage in constructive cooperation for promoting global energy security, drawing on its vast oil and gas resources," Rouhani told delegates before holding an hourlong meeting with executives of BP PLC, Italy's Eni SpA, Royal Dutch Shell PLC, Saudi Arabia's Aramco and France's Total SA.

What it certainly means is that any re-entry of Iran into world gas markets would mean the complete end to natural gas shortage scenarios and would further disrupt the energy and climate debate world wide. Obsessing about potential problems in this regard, could also obscure the potential benefits. And, as in shale gas, far sooner than the conventional wisdom predicts.There is a great potential case for jam tomorrow as we see from Jam today.

“Jam refinery is currently producing a total of 125 million cubic meters (mcm) of gas per day,” Eslami said, addressing a ceremony in the Southern province of Bushehr.

He also reminded that Jam Refinery produces 27 percent of Iran’s need to gas.

Jam refinery is located in the Pars Special Economic Energy Zone (PSEEZ) 300 kilometers to the Southeast of Bushehr port in Southern Iran.

Iran has surprised before after all. Allegedly

 

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