Iran has restarted work on a major gas liquefaction project it was forced to abandon several years ago owing to sanctions, and expects to have it operational before the current administration's time in office ends in mid-2025.
The two-train 10.8mn t/yr Iran LNG project is one of three LNG export projects the gas-rich country was planning to launch in the early 2000s, only for them to be shelved several years later because of international sanctions related to Tehran's nuclear programme.
The two other projects were the 10mn t/yr Pars LNG and 16.2mn t/yr Persian LNG plants on Iran's Mideast Gulf coast, which were each being led by TotalEnergies and Shell, respectively.
The Pars and Persian LNG plants were still at the early stages of development when they were abandoned, but work at the Iran LNG project at Assaluyeh, in Iran's southern Bushehr province, had progressed to the point that preparations to install the liquefaction trains had been largely completed.
German industrial engineering company Linde was originally supposed to provide the liquefaction equipment, but the sanctions imposed in the mid-2000s and then again in the early 2010s hindered Linde's ability to supply the technology. The project never really progressed beyond this point.
But today, Iran insists work on the project has already resumed despite US sanctions still being very much in place, and that this administration is pushing to "accelerate" work to complete the project before its term in office ends.
"We have been able to activate the large Iran LNG project, which had been abandoned [by the previous government] for more than eight years under the rain and scorching heat," Iran's oil minister Javad Owji said this week.
Owji said there are 700 people working on the project today, and that its utilities have all been prepared. He said the gas sweetening units of the plant will be "put into operation by early next year", referring to the Iranian calendar year that begins on 21 March. "We hope to bring it to a conclusion by the end of this government," he said.
With what gas?
This renewed push by the government to complete what would be Iran's very first LNG project comes at a time when many countries, particularly in Europe, are scrambling to find alternative energy supplies to replace Russian gas in the long-term following Moscow's move to invade Ukraine in February 2022.
But delivering on these ambitions will not be straightforward — first, because the country is still very much under the same kind of sanctions that hindered progress on the project several years ago, which will complicate efforts both to finance the development and secure the know-how needed to launch a gas liquefaction facility.
Second, and possibly more fundamentally, Iran will need to overcome the challenge of freeing up enough gas to feed what would be a major liquefaction project.
The country has been plagued by very high per capita consumption despite being the world's third-largest gas producer, which has severely limited volumes that could be directed towards exports. Of the 256.7bn m³ it produced in 2021, it used 241.1bn m³ domestically, leaving less than 20bn m³ available for export by pipeline, mainly to Turkey and Iraq.
About 13.5bn m³/yr of additional production would be needed to feed the 10.5mn t/yr Iran LNG project.
Iran is set to bring about double this volume on line from two phases — 11 and 14 — of the supergiant South Pars over the coming 12-24 months as part of a wider plan to boost domestic output to 547bn m³/yr by 2030 from about 368bn m³/yr today.
But unless the government somehow manages to curb the runaway demand growth the country has been recording for much of the past decade, something it has failed to do for many years now, even these additions may not be enough for Iran to realise its LNG export ambitions.
