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NIGC: Growing dependency on oil-fired power costs Iran billions

By REUTERS

NOVEMBER 19, 2013 17:12

DUBAI - Iran's growing reliance on burning oil products to make electricity, due to its inability to extract more natural gas, has cost tens of billions of dollars, the head of the National Iranian Gas Company (NIGC) said on Tuesday.

Iran sits on the world's largest known gas reserves, according to estimates by BP but, while demand has surged, it has made slow progress in developing them, largely because of Western sanctions over its nuclear program.

Iran's use of oil middle-distillates for power generation has risen from 8.4 billion cubic meters (bcm) in 1996 to 22.3 bcm in 2012, and has already hit 30 bcm in the last seven months, NIGC director Hamidreza Araqi told the Energy Ministry news website Shana.

Araqi said the use of liquid fuels rather than gas had in effect cost Iran $28 billion, but he did not specify a time period or spell out how he had arrived at the figure.

Iran's oil minister has warned that gas shortages over the next two years will force Iran to burn more costly and contaminating oil products, such as fuel oil and diesel.

Iran's fuel oil exports are expected to plunge over the next few months as winter demand forces it to divert export product to its own power plants.

According to the latest estimates by BP, Iran consumed around 156 bcm of gas in 2012, making it the third largest consumer behind the United States and Russia.

Araqi said 20 million Iranian households use natural gas, with 95 percent of the urban population and 54 percent of those in rural areas now supplied with gas. He said 70 power plants were equipped to run on gas.

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