Overview

Iran has the largest proven gas reserves in the world estimated at 33.8 trillion cubic metres in 2012 by the BP Statistical Review of World Energy 2014. This is equal to 18% of the worlds resources. Iranian gas production is considerable, breaking the 160 bcm mark in 2012 according to the United States Energy Information Administration. However, domestic demand is growing apace with production. Gas consumption is split between electricity generation and the upstream oil industry that use it to extend production from ageing fields.

Iran has ambitions to be a major exporter of gas, both by pipeline and LNG as it develops the huge South Pars gas field, but it first needs to constrain domestic demand. Progress has been made on this front to reduce subsidies on energy, but it will likely be many years before Iran becomes a major gas exporter.

Iran is under international sanctions because of its nuclear enrichment programme, with both the United States and Europe placing embargoes on Iranian oil. Other countries, including Japan and South Korea, are finding alternative sources of oil to pressure Iran into halting its nuclear programme. Since the withdrawal of the European majors in 2010 the development of the country’s major gas fields and LNG projects has stalled.

Chinese companies China National Petroleum Corp. and China National Offshore Oil Co. stepped in to replace Total and Shell in the country's key South Pars and North Pars projects, but they invested very little in the country and finally quit South Pars in 2012 amid intense international pressure. Iran is unlikely to get the next phase of South Pars or any of its LNG projects off the ground without international financing or expertise of international oil companies.

Page updated: 18/10/2012