Iran says gas exports to Iraq will start next month after delay

TEHRAN, Iran (Bloomberg) -- Iran, holder of the world’s biggest natural gas reserves, says it will start exports to Iraq in the next month, more than a year later than it originally planned.

Shipments will start at 7 MMcmd to supply a power plant in Baghdad, Hamid Reza Araghi, director of the National Iranian Gas Co., said in an interview with the Iranian Students’ News Agency. A second route to Basra will be opened in 2017, with shipments eventually reaching 70 MMcmd.

Iran is boosting crude oil and natural gas exports after international sanctions were eased in January. While its crude output has rebounded faster than expected, the natural gas exports to Iraq have taken more time. The National Iranian Gas Export Co. said in 2014 it would start exports to Iraq the following year.

“They are most of the way there,” Richard Mallinson, an analyst at Energy Aspects in London, said by phone on Monday. “Iraq desperately needs gas for its power stations.”

Iran Reserves

Iran has natural gas reserves of 1.2 Tcf, almost 40% more than Qatar, the world’s biggest exporter of LNG, according to BP Plc. By converting gas into LNG, producers can ship by tanker to markets not linked by pipelines. Iran’s natural gas network is already linked to Turkey.

Output at South Pars in Iran will be 540 MMcmd by the end of this year, from 430 MMcmd currently, Iran’s oil ministry news service Shana reported Aug. 3. For Iraq, gas imports can fuel its power plants, helping to alleviate blackouts and freeing up more of its oil for export.

“The Iranians want to find a home for more South Pars gas as volumes increase,” Mallinson said.