WASHINGTON, DC – The gas and electricity potential of Iran could be a boon for the entire Persian Gulf region if the P5 + 1 and the Islamic Republic adhere to the upcoming July 20th deadline to solidify a nuclear deal, according to Bijan Khajehpour, the Managing and Founding Partner of Atieh International, the overseas arm of a group of consulting firms based in Tehran.
Iran will be able to pursue more varying economic interests regionally and around the world if sanctions are eased off of the Islamic Republic, Khajehpour explained.
“Right now, one of the ironies of the Gulf Cooperation Council (GCC), with all due respect to the GCC, is that Qatar is exporting liquefied natural gas (LNG) to world markets. And [the] UAE, and Kuwait, and Saudi Arabia are importing LNG from world markets… The ships cross each other in the Strait of Hormuz,” he quipped at a recent discussion at the Wilson Center, a nonpartisan think tank based in Washington DC.
Khajehpour explained that all of the countries in the Gulf region have plans to further invest in petroleum products, such as petrochemicals, steel, aluminum, power generation, and cement. These products, in turn, will need refineries and plants to facilitate industrialization.
“Well,” he said, “you will have to have the energy for it.” And therein lies the problem.
Gas consumption in Saudi Arabia is ballooning, Khajehpour explained based on BP’s 2014 Statistical Review. The country is using liquid fuels, such as oil, to generate half of its electricity because they don’t have enough gas, Khajehpour added, while gas has a much higher energy efficiency for power generation.
Iran, meanwhile, has the largest gas reserves in the world, according to BP’s report.
Over the last three years, from 2011 to 2013, the country has introduced subsidy reform plans to move energy commodities’ prices closer to free market values. This has restrained gas consumption and should allow Iran to devote more gas to development of petrochemical products, according to Atieh International.
The country has also been developing the potential of its gas industry through pipelines and other development projects. Currently, there are pipelines connected with Azerbaijan, Armenia, Georgia, Turkey, Iraq, and Oman. There’s a planned pipeline with Kuwait, and unused pipelines connecting the country to the UAE and Pakistan.
“It’s not just on paper,” said Khajehpour, “it’s happening. These pipelines are being built, and contracts are being negotiated and signed.”
Khajehpour projects that over the next two years, provided there is a nuclear deal and sanctions are slowly eased off of the Islamic republic, Iran will increase its gas production exponentially, from its current 600 million cubic meters (mcm) to 840 mcm.
Khajehpour explained that Saudi Arabia and other Gulf countries will need to buy gas in order to industrialize.
“If they don’t buy it from Iran, they’ll have to buy it from Trinidad and Tobago. They have to buy it, there is no doubt about that,” he exclaimed.
However, this represents potential and possibilities for cross border collaboration and partnerships, he said. “If I were one of the other players in the region, I would be relieved because there is excess gas that we can import,” explained Khajehpour.
He gave Oman as an example where Iranian oil is converted into LNG and exported to world markets.
“Everyone is winning,” he said.
“The economic and energy interdependency could become a platform for cooperation!” he exclaimed.
The Islamic Republic of Iran is home to the South Pars / North Dome Field, the largest gas field in the world.
