Al Monitor | Bijan Khajehpour: In the early 2000s, as Iran drafted ambitious plans to exploit its huge gas potential, allocating some of the gas for the production of liquefied natural gas (LNG) was firmly on its agenda. In fact, three projects were outlined: Pars LNG, a joint venture between Total (50%), the National Iranian Oil Company (NIOC, 40%) and Petronas (10%); Persian LNG, a joint venture between Shell (25%), Repsol (25%) and NIOC (50%); and Iran LNG, a company owned by NIOC with undetermined international partners. All three projects invested heavily in paving the way for the future production and export of LNG from Iran.


By the late 2000s, however, the international partners in the first two ventures were forced to abandon the projects given the intensification of nuclear sanctions against Iran. What remained was the third project, Iran LNG, and the frustration in Tehran that massive investments in the LNG sector had gone to waste. In fact, in light of the withdrawal of international companies and potential technology providers, Iran excluded any role for LNG in its subsequent gas sector strategy.

Developments in a number of fields have since compelled Iranian petroleum sector strategists to reconsider and take a more serious look at LNG. The factors contributing to the shift in strategy include the following:

• Growth in gas production: Iran’s actual gas production and potential for exports have increased substantially, allowing the country to plan for major export activity.


• Availability of Western technology: The lifting of nuclear sanctions has made it feasible for Tehran to again secure the needed technologies and equipment to construct LNG complexes.


• Demand outlook for LNG: The growth projection for LNG is such that global demand will grow by 50% in 2020 compared with demand in 2014.


• Changing geostrategic realities: Qatar is Iran’s most significant competitor in the global LNG market, and an improvement in relations between them in the aftermath of the Saudi-led blockade against Qatar has paved the way for a more pro-active LNG strategy in Iran.


• Commitment to stop the flaring of gas: Tehran envisions a total ban on flaring gas in the South Pars gas fields by 2020, a process that can be facilitated through converting some of the freed gas to LNG through so-called floating LNG (FLNG) capacity.