Iran scraps second LNG project: report

9th August 2010, Comments 0 comments

Iran has scrapped a second liquefied natural gas (LNG) project which was to be executed by French energy giant Total, a report said on Monday, after a similar facility to the Anglo-Dutch Shell was recently dropped.

Mohsen Khojastemehr, Deputy Oil Minister, told the oil ministry's news agency Shana that the plan now was to "inject the gas from South Pars blocks 11, 13 and 14 into oil fields and in the national gas network," indicating that the LNG project which was to be constructed by Total in phase 11 was dropped.

Anglo-Dutch energy major Shell was planning to build another LNG facility at phases 13 and 14, the scrapping of which was announced on Saturday by a top oil official.

The latest announcement comes as several top global energy majors have either quit or are considering an exit from Iran, which holds the world's second-largest natural gas reserves.

Total had been awarded the gas block but is now withdrawing from Iran following the fourth round of UN sanctions that was adopted by the Security Council in June. Shell quit ahead of the sanctions.

"Some countries had used a policy of lengthy negotiations and wasting time to impede the production of South Pars projects," Khojastemehr said.

His remarks came two days after a top oil official said Iran was reviewing its energy policy to shift focus from production of LNG to producing pipeline gas for exports.

Ahmad Ghalebani, managing director of state-run National Iranian Oil Company said on Saturday the review will not totally lead to scrapping of LNG projects completely as they could become "economical" in the future.

Explaining the rationale for focussing on piped gas exports, Ghalebani had said that "(piped) gas exports are cheaper and can be done faster, while exports of LNG not only require huge investments and complicated technology but are also time consuming."

A third LNG project, Iran LNG, led by the National Gas Company of Iran using German technology is advanced with Tehran having already invested over one billion dollars.

Tehran has been slapped with unilateral sanctions by the United States and European Union, apart from the UN measures, for its nuclear programme.

The measures target Iran's banking, financial and vital energy sectors in a bid to force the country into abandoning the uranium enrichment programme, the most controversial part of its nuclear drive, which Western countries fear masks a weapons programme.

Iran denies the charges.

Iran, which possesses the largest gas reserves in the world, currently consumes the bulk of its production of nearly 600 million cubic metres per day.

Tehran hopes to double gas production within five years through the South Pars fields and emerge as a major gas exporter.

© 2010 AFP

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