As I’m sure you know, the nuclear deal with Iran has made global oil prices erratic.
Will Iran’s oil supply add to the glut? Will we see any of that supply any time soon?
But here’s another question you might want to ask yourself: Will the country with the second-largest natural gas reserves shake up the natural gas and LNG market too?
According to a Fitch report, Iran has about 34 trillion cubic meters of natural gas proved reserves, which amounts to just under 18% of the world’s supply. With nearly one-fifth of the world’s natural gas, and sanctions on its trades lifting as of the end of this year, Iran is set to become a major producer.
Howerever, there are a few concerns with this theory…
Before Iran’s massive stores can be added to the market, they have to be transported out of the country. And right now, Iran only accounts for 1% of the global natural gas market, and 90% of its exports go to Turkey alone.
Infrastructure is key in this matter. Iran is positioned so that it could export easily to India, China, and Pakistan. And with expansions to its existing infrastructure, it would be possible for the country’s supply to move through the Trans Anatolian Pipeline, connect to the Trans Adriatic Pipeline, and end up in Western Europe for consumption.
However, infrastructure costs aside, this leads to another problem: the Trans Anatolian Pipeline is not expected to be transporting any product until 2020. A study done by the Carbon Tracker Initiative finds that there could be $283 billion worth of LNG assets that will not be necessary in the next ten years.
This means only countries with established natural gas and LNG exports, or those like the U.S. with export terminals set to start trade in the next few years, will still be cost efficient in that time frame.
To continue reading…
Until next time,
A true insider in the technology and energy markets, Keith’s research has helped everyday investors capitalize from the rapid adoption of new technology trends and energy transitions. Keith connects with hundreds of thousands of readers as the Managing Editor of Energy & Capital, as well as the investment director of Angel Publishing’s Energy Investor and Technology and Opportunity.
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