NaturalNatural GasGas IndustryIndustry inin IranIran

WorkshopWorkshop onon thethe RoleRole ofof NationalNational OilOil CompaniesCompanies

BakerBaker InstituteInstitute forfor PublicPublic PolicyPolicy Houston,Houston, TexasTexas MayMay 5,5, 20052005

DavoodDavood GhasemzadehGhasemzadeh,, Ph.D.Ph.D. MainMainMain IssuesIssuesIssues

1.1. Iran GasGas IndustryIndustry

2.2. NIGC’s NIGC’s ActivitiesActivities

3.3. NIGEC NIGEC

4.4. NIGEC’sNIGEC’s Activities Activities

5.5. ExportExport byby PipelinePipeline

6.6. ExportExport asas LNGLNG NaturalNatural GasGas IndustryIndustry inin IranIran OilOil andand GasGas ReservesReserves ofof IranIran

•• InIn thethe yearyear 2003,2003, thethe oiloil andand gasgas reservesreserves inin IranIran werewere estimatedestimated toto 270270 billionbillion barrelsbarrels ofof oiloil equivalentequivalent withwith sharesshares ofof 37%37% forfor oiloil andand 63%63% forfor naturalnatural gas.gas. •• TheThe presentpresent reservesreserves forfor naturalnatural gasgas isis estimatedestimated toto 26.726.7 TCM,TCM, 52%52% ofof reservesreserves locatedlocated inin southernsouthern regionsregions ofof thethe countrycountry andand inin thethe vicinityvicinity ofof thethe PersianPersian gulfgulf waters.waters. •• GasGas ProductionProduction forfor domesticdomestic consumptionconsumption andand exportsexports areare generallygenerally producedproduced fromfrom independentindependent gasgas fields.fields. TheThe associatedassociated gasgas productionproduction fromfrom commoncommon oiloil adad gasgas fieldfield isis generallygenerally utilizedutilized forfor gasgas injectioninjection toto oilfields.oilfields. Ministry of MinistryMinistry ofof PetroleumPetroleum

NIOCNIOC NIGCNIGCNIGC

NIGECNIGEC

NIOPDCNIOPDC NPCNPC NIGCNIGC MainMain ActivitiesActivities

•• GasGas TreatmentTreatment •• GasGas TransmissionTransmission •• GasGas DistributionDistribution •• ResearchResearch && DevelopmentDevelopment •• EngineeringEngineering && ConstructionConstruction •• UndergroundUnderground StorageStorage HighHigh PressurePressure GasGas TransmissionTransmission PipelinesPipelines

30000 29400

20400 18400 20000 16300 13900 15300 12700 Km

10000

0 1999 2000 2001 2002 2003 2004 2009 GasGas DistributionDistribution NetworksNetworks

125 130

95 87 79 69 59 65 51 thousand Km

0 1999 2000 2001 2002 2003 2004 2009 NaturalNatural GasGas ConsumptionConsumption byby HouseholdersHouseholders

14 12

9.1 9.7 8.4 6.6 7.4 7 6 million households million

0 1999 2000 2001 2002 2003 2004 2009 NumberNumber ofof CitiesCities UsingUsing NaturalNatural GasGas

690 700

489 515 437 379 392 346 350 number

0 1999 2000 2001 2002 2003 2004 2009 NaturalNatural GasGas vs.vs. OilOil ProductsProducts ConsumptionConsumption inin IranIran (1991(1991--2009)2009)

700 Oil Products

350 million boe

7 6 0 4 0 008 2009 1 2 0 20 2 0 9 0 0 003 2005 20 9 0 00 2 20 6 20 2 2 4 997 19 20 9 995 99 1 1998 99 1 1 991 19 1 1 1992

Oil Products Gas DomesticDomestic AnnualAnnual GasGas ConsumptionConsumption

180 156.2

120 87.6 97.4 78

bcm 65 59 67.8 60

0 1999 2000 2001 2002 2003 2004 2009 NaturalNatural GasGas ConsumptionConsumption BreakdownBreakdown byby SectorsSectors inin 20032003

Residential/ Power Commercial Plants 34.1% 38.2%

Industries 27.7% NIGCNIGC PlanPlan inin 20042004

•• DistributionDistribution NetworkNetwork 8,0008,000 KmKm •• NewNew HouseholdsHouseholds 600,000600,000 •• GasGas TransmissionTransmission PipelinePipeline 2,0002,000 KmKm •• CompressorCompressor StationsStations 55 •• DomesticDomestic GasGas ConsumptionConsumption 97.497.4 bcmbcm NIGCNIGC MainMain ProjectsProjects (2004(2004--2009)2009)

•• BidbolandBidboland--IIII RefineryRefinery 57MMCMD57MMCMD capacitycapacity •• IlamIlam RefineryRefinery 1010 MMCMDMMCMD capacitycapacity •• ParsianParsian Refinery(phaseRefinery(phase I)I) 4848 MMCMDMMCMD capacitycapacity •• ParsianParsian Refinery(phaseRefinery(phase II)II) 2828 MMCMDMMCMD capacitycapacity •• MasjedMasjed SoleimanSoleiman refineryrefinery 11 MMCMDMMCMD capacitycapacity NIGCNIGC MainMain ProjectsProjects (2004(2004--2009)2009) •• IGATIGAT--IVIV 10001000 KmKm lengthlength (Approved)(Approved) 5656 inchinch diameterdiameter •• IGATIGAT--VV 505505 KmKm lengthlength (Approved)(Approved) 5656 inchinch diameterdiameter •• IGATIGAT--VIVI 500500 KmKm lengthlength (Approved)(Approved) 4848 inchinch diameterdiameter •• IGATIGAT--VIIVII 860860 KmKm lengthlength (Under(Under Study)Study) 3636--4242 inchinch diameterdiameter •• IGATIGAT--VIIIVIII 10501050 KmKm lengthlength (Approved)(Approved) 5656 inchinch diameterdiameter NIGCNIGC MainMain ProjectsProjects (2004(2004--2009)2009)

•• 3434 CompressorCompressor StationsStations withwith TotalTotal PowerPower 4,500,0004,500,000 hphp

•• 5,0005,000 KmKm GasGas TransmissionTransmission LineLine forfor NewNew CitiesCities

•• GasGas SupplySupply toto 132132 IndustrialIndustrial TownsTowns OutlookOutlook inin 20092009

• Gas Transmission Pipeline 29,400 Km

• Distribution Network 125,000 Km

• Daily Domestic Consumption 591 MMCMD

• Gas Share in Iran Energy Basket 68.8 %

• Population Using Natural Gas 54,000,000 NIGECNIGEC National Iranian Gas Export Company (N.I.G.E.C)

MINISTRYMINISTRY of of PETROLEUM PETROLEUM

NIOPDC NPC NIOC NIGC

NIGEC

NIGEC is responsible for Iranian Natural Gas marketing & sales all over the world and will manage all related investments and projects on behalf of NIOC. NIGEC Responsibilities:

1- Marketing of Iranian natural gas and related products

2-Establish joint ventures with potential buyers/investors

3-Negotiate and Finalize Gas and LNG sales and Purchase agreements with buyers

4-Invest for his share ?

5-manage and carry out NIOC-LNG by NIOC investment and financing

6- develop gas market and related products to manage and carry out GTL projects IRAN NATURAL GAS EXPORT /IMPORT PROJECTS & POTENTIAL

Nakhechevan Armenia Georgia Ukraine Europe TURKMENISTAN

Turkey Europe

Pakistan/India

India China Far East UAE , KUWAIT, BAHRAIN & OMAN LNG Europe • Iran – Turkey ( Export began in December 2001) • Iran – Armenia ( Export will begin by 2007 ) • Iran – Nakhichevan (export is expected to begin by September 2005) • Iran - U.A.E. (Negotiation is underway) • Iran – Kuwait (Terms Sheet has been signed) • Iran – Oman (MOU has been signed) • Iran - Pakistan and India (Negotiation is underway) • Iran - India (Offshore) (Negotiation is underway) • Iran – Europe (Negotiation is underway) IRAN NATURAL GAS EXPORT PROJECTS & POTENTIAL

Gas SPA Status for pipeline projects

PROJECTPROJECT QTY QTY ( ( BCM/ BCM/ Y Y ) ) STA STA RT RT STA STA TUS TUS TURKEYTURKEY 3 3 upto10 upto10 2001 2001 SIGNED SIGNED ARMENIAARMENIA 1~ 1~ 2.3 2.3 2007 2007 SIGNED SIGNED NANA KHCHA KHCHA V V A A N N 0 0 . 3. 3 5 5 2 2 0 0 0 0 5 5 Ne Ne got got ia ia t t ion ion UAE(1st,UAE(1st, 2nd 2nd & & 3rd 3rd Contracts Contracts)) 2020 upto upto 25 25 2005~ 2005~ 7 7 1st 1st one one SIGNED SIGNED KUWAITKUWAIT 3 3 .1 .1 2007 2007 Negotiation Negotiation OMAOMA N N STUDY STUDY STUDY STUDY Ne Ne got got ia ia t t ion ion IRAN-EUROPEIRAN-EUROPE STUDY STUDY STUDY STUDY Negotioation Negotioation IRAN-PAKISTAN-INDIAIRAN-PAKISTAN-INDIA 27 27 2009 2009 Negotioation Negotioation TurkeyTurkey ContractContract

•• AA contractcontract signedsigned withwith TurkeyTurkey inin 19961996 toto supplysupply naturalnatural gasgas upup toto 1010 bcmbcm perper yearyear

•• ContractContract periodperiod :: 2525 yearsyears

•• StartingStarting :: DecemberDecember 20012001 Bazargan Metering Station ExportExport PlanPlan toto TurkeyTurkey (2001(2001--2026)2026) 16 13 13 13 13

12 10 10 1010 10 10 10 10 9 8 7 bcm 6 5 4 4 3

0

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2015 2020 2025 2026

Certain Ex. Probability Ex. Natural Gas Import TurkmenistanTurkmenistan ContractContract

•• AA contractcontract signedsigned withwith TurkmenistanTurkmenistan toto purchasepurchase naturalnatural gasgas upup toto 88 bcmbcm perper yearyear

•• StartingStarting :: 19971997 ImportImport PlanPlan fromfrom TurkmenistanTurkmenistan (1997(1997--2022)2022)

9 888888888 7.5 77 6.5 6 6 55 4 bcm

3 2

0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2008 2010 2012 2014 2016 2018 2020 2022 REVIEWREVIEW OFOF IRANIRAN LNGLNG PROJECTSPROJECTS • NIOC LNG • PARS LNG • PERSIAN LNG • IRAN LNG This Project belongs 100% to NIOC and allocation of shares to some reputable international Buyers is under negotiation.

¾Including two trains with total capacity of 9.6 MMT/Y. ¾Anticipated Commencement Date: Early 2009. ¾Daily Feed Gas Volume: 50 MMCM. ¾Feed Gas Resource: South Pars Field-12. ¾Onshore Facilities Location: Tombak Port ¾Project Approximate Total Cost: US$ 2.2 Billion ¾LNG Process: Linde or Axens Latest Status of NIOC LNG Project

• EPC Contract for Plant ,Storage Tanks, Marine Facilities & Management Contractor (MC) have been issued and EPC Contractor has been selected . Location of Phase 12 and Tombak Port Source of Gas

• Phase 12 of Super giant South Pars gas field is allocated to feed NIOC LNG Plant.

• South Pars is the world largest non-associated gas field and world largest hydrocarbon accumulation.

• The reseve of the South Pars gas field is estimated at 500 Tcf (14 Tcm) of Natural Gas and 18 Billion bbl of Condensate. Petronas 20% NIOC TFE 50% 30%

¾Including two trains with total capacity of 8.8 MMT/Y. ¾Anticipated Commencement Date: 2009. ¾Daily Feed Gas Volume: 45 MMCM. ¾Feed Gas Resource: South Pars Field-11 ¾Onshore Facilities Location: Tombak Port ¾Project Approximate Total Cost: US$ 1.7 Billion ¾LNG Process: Axens Latest Status

• SHA (Share Holders Agreement has been signed in early 2004. Persian LNG

Shell 25% NIOC 50%

Repsol 25%

¾Including two trains with total capacity of 14 MMT/Y. ¾Anticipated Commencement Date: Year 2009. ¾Daily Feed Gas Volume : 52 MMCM. ¾Feed Gas Resource: South Pars Field-13 ¾Onshore Facilities Location: Tombak Port ¾Project Approximate Total Cost: US$ 2.5 Billion ¾LNG Process: Shell GameChangerTM DMR IRAN LNG

Project has been suspended due to reorganizing the structure of Shareholders and Marketing. ThankThank YouYou forfor YourYour KindKind AttentionAttention