Iran is negotiating cooperation on construction of floating liquefied natural gas plants (FLNG) with an undisclosed industry major, according to the head of the National Iranian Gas Company Alireza Kameili.
The announcement comes ahead of the long-anticipated deal on lifting of sanctions against Iran, which have, among other things, frozen several LNG projects.
“Due to their high economic viability, Iran is moving in the direction of building FLNG plants,” Kameli is quoted as saying by Iranian Press Tv.
Kameli added that preliminary talks are underway with more than 170 foreign companies which are ready to receive gas from Iran.
However, as the talks between the western powers and Tehran further prolong with several missed deadlines on sealing the deal, it is unlikely that sanctions will be lifted before the fourth quarter of 2015.
On the other hand, Iran has made it clear that it will endeavour to return exports to pre sanction levels if the embargo is lifted.
“Whilst Tehran claims it could increase production immediately by 500,000 b/d and then another 500,000 b/d six months later, most market participants are more pessimistic,” Gibson Shipbrokers says in its tanker report.
However, oil/condensate in floating storage, which Gibson estimates at approximately 42 million barrels, could be quickly released.
Iran’s return to the market would be welcome in terms of increasing production in an oversupplied market, notably with regards to difficulties in placing and discharging cargoes ashore, Gibson claims. However, with more Iranian crude, comes the release of more Iranian tonnage.
The Iranian fleet currently consists of 37 VLCCs (5.8% of the global VLCC fleet), 12 Suezmaxes and 5 Aframaxes, with most currently absent from the conventional tanker market. The Iranian fleet will need to re-establish compliance with international standards if it is to enter the mainstream spot markets.
“Therefore, the net effect is not only more ships, but also improved trading efficiency, bolstering the supply fundamentals,” Gibson added.