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Use of natural gas for producing goods/services with higher value added such as production of electricity and petrochemicals makes more economic sense than the mere export of this fossil fuel. said Energy Minister Hamid Chitchian.
He said that profits from exporting natural gas. especially via pipeline. are on the decline. Exporting electricity and other products with higher value-added is apparently more viable.
Pointing to Iran`s substantial infrastructure for electricity export to Pakistan. Turkey. Iraq. Afghanistan. Azerbaijan and Armenia. Chitchian said signing simultaneous gas and electricity supply contracts with (overseas) buyers is a wrong policy. adding that there should be coordination between the oil and energy ministries in power and energy exports.
According to Chitchian. neighboring countries are understandably more interested in importing gas at low prices and convert it into electricity as it is more profitable than importing power.
The minister recalled that gas exports mean laying pipelines at exorbitant costs. especially in Iran whose national gas grid. aka IGAT. is yet to be fully completed. Nevertheless. power exports involve lower levels of risk and higher profit.
There is no (standard) international pricing mechanism for natural gas as the price is set regionally because of varying transportation costs. Supply costs are normally covered by exporters.
Revenues from electricity export are more sustainable than those from oil and gas. Bahram Nezamolmolki. director general of the Energy Ministry`s Office for Developing Export of Technical and Engineering Services. said. noting that power prices are less dependent on the fluctuations in the price of oil and gas in global markets.
