Iran special: Could Tehran revive LNG export ambitions?

Spanish Market: Natural gas
11/06/21

The lifting of US sanctions would be one obstacle toppled, but the need to produce more gas to feed projects presents another hurdle, writes Antonio Peciccia

Iran has long harboured LNG export ambitions, as the holder of the world's second-largest natural gas reserves, but while the possible removal of US sanctions could lead Tehran to revive those plans, they would still face many challenges.

Previous LNG project plans stalled over the past decade because of the international sanctions related to Tehran's nuclear programme. TotalEnergies and Shell abandoned two projects, the 10mn t/yr Pars LNG and 16.2mn t/yr Persian LNG, respectively, as sanctions escalated at the beginning of the last decade. An attempt to revive these two projects under the management of state-owned oil company NIOC following the 2015 nuclear deal also ran adrift after the US administration of President Donald Trump abandoned the deal and reimposed sanctions in 2018.

Iran had also planned a third liquefaction project, the 10.8mn t/yr Iran LNG, and had agreed with Muscat on construction of a pipeline that would allow some Iranian gas to be used as feedgas for Oman's 10.4mn t/yr Qalhat liquefaction plant, but this project has also made little progress in recent years. Start-up of the Khazzan and Ghazeer tight gas fields off Oman freed up more gas from the country's onshore fields to feed Qalhat, leaving little capacity available to liquefy extra supply.

While Persian LNG and Pars LNG were still at early stages of development, preparations for installing Iran LNG's liquefaction trains had been largely completed by early 2017. But the reintroduction of US sanctions prevented German industrial engineering firm Linde from exporting equipment for the trains to Iran.

And reviving Iran's LNG ambitions would face a more fundamental challenge in the need to free up enough gas to feed a major liquefaction project. The country is the world's third-largest gas producer, but also its fourth-largest gas consumer — from output of 244bn m³ in 2019, 224bn m³ was used domestically, leaving just 20bn m³ available for export by pipeline, mainly to Turkey and Iraq. About 13.5bn m³/yr of extra production would be needed to feed the 10.5mn t/yr Iran LNG.

Long maritime coming

Iran has been striving to accelerate development of key upstream assets in recent months, awarding a number of contracts to domestic firms, including for the offshore Farzad-B gas field that straddles the maritime border with Saudi Arabia, which is expected to add around 10bn m³/yr of output. And in December 2020, NIOC subsidiary Petropars began drilling work at the long-delayed phase 11 of the supergiant offshore South Pars field in the Mideast Gulf, with the aim of producing 1bn ft³/d (10.3bn m³/yr). Oil minister Bijan Namdar Zanganeh said last August that Iran aims to have South Pars gas reaching onshore facilities within a year. Petropars took over the project after TotalEnergies, which led the consortium that won the contract for developing phase 11 in 2017, withdrew in August 2018 after failing to secure a sanctions waiver from the US.

The supergiant reservoir of South Pars is shared with Qatar, where it is known as the North Field — and Qatari state-owned QP this year sanctioned a $28.75bn investment in four new LNG production trains to boost capacity to 110mn t/yr by 2025 from 77mn t/yr. Further developments will add two more trains to hit 126mn t/yr by the end of 2027. Qatar's decision in 2017 to lift its 2005 moratorium on further North Field development made Iran's South Pars development a more pressing issue for Tehran, given concerns over the potential impact that Qatar's huge expansion project will have on South Pars' reservoir pressure. But while QP is already weighing partnership bids from leading international oil firms — including TotalEnergies — to take up to 30pc in the project, Iran will struggle to draw investment interest. Even before sanctions were reimposed in 2018, TotalEnergies' South Pars investment plans steered clear of any LNG project commitment.

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04/04/25

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Mexico, Canada sidestep latest Trump tariffs: Update

03/04/25

Mexico, Canada sidestep latest Trump tariffs: Update

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Trump to 'stand firm' on tariffs as markets crash

03/04/25

Trump to 'stand firm' on tariffs as markets crash

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LNG faces limited direct disruption from US tariffs

03/04/25

LNG faces limited direct disruption from US tariffs

London, 3 April (Argus) — New US trade tariffs announced on 2 April are unlikely to cause any direct disruption to the LNG market because global LNG demand has become more inelastic in the past three years. But market participants warned of recessionary pressure and indirect effects on gas demand. The key recipients of US LNG — the EU, Japan and South Korea, for example — may be considering responding to the new US trade policy with retaliatory tariffs, among other measures. But these are unlikely to include levies on US LNG imports, market participants said, which would limit any direct disruption on LNG trade flows in the Atlantic basin. Europe has become much more reliant on LNG imports after losing the bulk of Russian pipeline imports. Europe last year imported 45pc of its LNG from the US, according to ship-tracking data from analytics firm Vortexa. And the EU would need quick LNG imports to replace Russian supply and fill its underground storage facilities this summer, with its combined gas inventory level at 33pc on 31 March, according to transparency platform Aggregated Gas Storage Inventory. Traditional Asian importers such as Japan, South Korea and Taiwan are likely to seek an engagement approach other than direct retaliatory tariffs on US imports. US LNG purchases in the past often have been a means by which to reduce countries' trade surplus with the US. South Korea's energy minister expressed the country's interest in the 20mn t/yr Alaska LNG project in a visit in late March , while Taiwan's CPC signed an initial agreement for the project, according to Taiwan's Ministry of Economic Affairs . Emerging LNG importer Vietnam was considering reducing import taxes on US LNG to 2pc from the present 5pc, according to state-owned PV Gas. The possibility of increasing US LNG purchases in the future also may be a key element in potential trade negotiations with the US aimed at reducing the 46pc tariffs on imports from Vietnam announced on 2 April, according to market participants. LNG trade flows already had been reshuffled before the latest round of US tariffs, in light of China's retaliatory tariff of 15pc on US LNG imports. China halted LNG imports from the US in early February , by reselling its contracted US offtake in other markets and replacing it with cargoes of other origin, if needed. But the tariffs have destabilised economies around the world, particularly those with large trade surpluses with the US, which are likely to reduce gas and LNG demand in different geographies. Tariffs pose direct risks for US LNG projects US tariffs on steel and aluminum imports, imposed on 12 March, present an immediate risk for US LNG developers, particularly for the five projects currently under construction and the six others expected to reach final investment decisions in 2025. Metals represent up to 30pc of the cost of building an LNG export plant. Depending on the project's size, an LNG terminal could cost $5bn-$25bn, with steel used for pipelines, tanks and other structural frameworks. Although facilities can use some domestic supplies for construction, higher prices could result in delays to construction and final investment decisions in planned liquefaction projects ( see table ). Delays to the planned 18.1mn t/yr Golden Pass LNG facility have already underscored how rising costs can upend construction timelines. Zachry, a lead contractor in engineering, procurement and construction work for the facility, filed for bankruptcy last May and exited the project. Pandemic-related inflation and supply chain delays have caused costs to surge by $2.4bn from the original $9.25bn contract, the firm said . Golden Pass, which once targeted first LNG in the second half of last year, now expects its first production in late 2025 or early 2026 . NextDecade's 17.4mn t/yr Rio Grande LNG project in south Texas had bought only 69pc of supplies for trains 1-2 and only 33pc for train 3 by late February, making the three-train project particularly vulnerable to higher steel prices. Projects that are closer to completion may face less inflationary pressure. Equipment and materials needed for the seven-train expansion at Cheniere's Corpus Christi stage 3 were delivered, according to the firm in February . And 34 of 36 liquefaction trains at Venture Global's Plaquemines facility have been delivered on site, with the two remaining trains expected to arrive by the end of March, Venture global said last month . US LNG projects in pipeline Project Capacity ( mn t/yr ) Expected start/FID Under construction Plaquemines 19.2 2025 Corpus Christi stage 3 12.0 2025 Golden Pass 18.1 2026 Rio Grande 17.6 2027 Port Arthur 13.5 2027 Waiting for final investment decision Delfin FLNG 1 13.2 mid-2025 Texas LNG 4.0 2025 Calcasieu Pass 2 28.0 mid-2025 Corpus Christi train 8-9 3.3 2025 Louisiana LNG 16.5 mid-2025 Cameron train 4 6.8 mid-2025 — Argus Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

South Korea’s GS Energy seeks term LNG from 2028

03/04/25

South Korea’s GS Energy seeks term LNG from 2028

Singapore, 3 April (Argus) — South Korean private-sector firm GS Energy's subsidiary GS Energy Trading Singapore is seeking LNG deliveries starting from 1 January 2028, over a 5-15 year period. The first round of offers will be due on 25 April and the second to close on 1 August later this year. The firm has requested volumes of up to 0.81mn t/yr in 2028 and up to 0.97mn t/yr from 2029 onwards. This is equivalent to around 13-14 cargoes/yr in 2028 and about 16-17 cargoes/yr from 2029 onwards, assuming an average LNG cargo size of 60,000t. The cargoes will be delivered to the country's 10.8mn t/yr Boryeong terminal, which is owned by power producers SK E&S and GS Energy. The firm has also specified for offers to be linked to Brent or a hybrid of Brent and Henry Hub. South Korean utility Korea South-East Power in June 2024 also signed an agreement with TotalEnergies for a five-year term delivery of up to 500,000 t/yr of LNG to South Korea from 2027. Meanwhile, state-owned gas incumbent Kogas is expected to operate with a smaller pool of long-term LNG supplies from 2025, with the government granting it more flexibility in its procurement strategy. Long-term contracted supply volumes may typically be priced at a higher premium, and could be deemed as a small price for buyers to secure supply security, traders said. By Naomi Ong Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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