Iran prefers to export liquefied natural gas (LNG) to distant markets including the EU, but no agreement has yet been reached on the construction of plants for the purpose, reported Trend News Agency.

The country’s sole LNG project, the 52-percent completed ‘Iran LNG’ needs an investment of about $8-10 billion and talks with foreign investors haven’t yielded any results so far.

Last year, Managing Director of National Iranian Oil Company Ali Kardor said that Iran is targeting exports of 0.5-2 million metric tons per year (MT/y) of LNG using mini-LNG plants and floating LNG vessels (FLNG) — Iran’s alternative projects to export LNG.

The country has signed memorandum of understandings (MoU) with South Korean Kogas on the development of LNG projects as well as with National Energy Administration of China on developing mini-LNG projects.

However, talks on purchasing or manufacturing floating liquefied natural gas (FLNG) vessels in recent months have so far yielded no results.

Now, Kardor says that Iran’s first deal on the construction of a FLNG facility will soon be signed with a Norwegian company.

The 20-year deal is intended to produce 500,000 tons of LNG, Kardor said on October 10, adding that pricing formula of the products will be determined by the Oil Ministry.

He did not disclose the name of the Norwegian firm, but last year it was announced that Tehran is negotiating with Norwegian Golar and Hemla Vantage companies.

Golar owns one of the largest FLNG fleets in the world, while Hemla Vantage was keen to lease a FLNG vessel from a Belgian company, Exmar, to collect and liquefy flaring gas in offshore fields around Kharg Island in the Persian Gulf (the amount of yearly collection and liquidation of flaring gas in Kharg Island can stand at 0.5 MT).

Launching FLNG and mini-LNG facilities will help Iran diversify and expand its natural gas market.

The projects will also grant the country chance to convert its flaring gas (mostly from burning associated gas in the oil sector), which currently amounted at about 11 billion cubic meters per year (bcm/y), into LNG.

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On the contract for export of Iran’s LNG to Korea, Zanganeh said as for the LNG exports contract package it should be said that it should be the kind which would envision completion of the LNG factory and repayment of the costs to the contractor out of LNG extraction revenues. “Of course, the Koreans are not the only party in the contract, rather the Germans and Japanese are the other parties.”

He then pointed to the oil output of one to one and half a million barrels out of the new model of oil contracts.

The Minister said diversion of funds out of the domestic sources and the National Development Fund is also on agenda, though it should be born in mind that the fund sources are not unlimited and there are many volunteers for it.

Iran needs 70 billion dollars for the downstream sector development plans

“Securing necessary financial sources to attain the Sixth Five-Year Plan objectives, including 130 billion dollars, for the upstream and about 70 billion dollars for the downstream sector is a very difficult job,” he said.

Zanganeh commented on the latest condition of the Persian Gulf Star refinery and said for the time being, kerosene and gasoil are transferred in the refinery but high quality gasoline production at the refinery will start as early as 2017.

Sessions are regularly held to follow up the Persian Gulf Star refinery project and works are going on well, he added.

The minister said petrochemical revenues of Iran have now reached 25 billion dollars from one billion dollars in 1997.

He added that plans are underway to raise value of the petrochemical products by five billion dollars by end of this year (to end on March 20) to more than 30 billion dollars.

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