NIOC National Iranian Oil : Iran Seeks Rapid Reboot for Natural Gas Exports

Iran holds the world's largest reserves of natural gas, but has long lacked the export infrastructure of competitors such Russia and Qatar. They have networks of international pipelines as well as liquefied-natural-gas facilities that enable them to export gas by ship.

Tehran is exploring several options to help the country 'join the international LNG club,' said Alireza Kameli, managing director of National Iranian Gas Export Co., in an interview.

One project would involve restarting work on the country's most advanced LNG project, Iran LNG, which was 40% complete when tightened Western sanctions forced work to be abandoned in 2012. It could take another three to four years to complete the project, Kameli said.

Another option would be building a pipeline beneath the Persian Gulf to Oman, which has LNG facilities that Iran could potentially use. Kameli said Oman has agreed to build the pipeline within two years. Omani officials didn't respond to requests for comment.

Kameli said his company is also in talks with European companies, including Oslo- and Nasdaq-listed Golar LNG Ltd., to build floating LNG facilities-offshore vessels on which the gas would be liquefied. Such a project would take 'less than two years,' he said. Golar declined to comment.

Once LNG facilities are in place, Kameli said, exports to 'Europe definitely could be considered.'

Last week, Hellenic Petroleum, Greece's largest refinery, agreed to buy oil from National Iranian Oil Co., marking the first sale of Iranian crude to a European country since the lifting of trade sanctions against the Middle Eastern nation. Other European companies are promising billions in new deals in Iran as Iranian President Hassan Rouhani visits Europe this week to revive trade and political ties.

European Union officials have said Iran could be a key supplier of natural gas and help the bloc reduce its reliance on Russia.

But the two-year horizon 'doesn't sound very realistic,' one EU official said, citing internal assessments from the European Commission, the bloc's executive arm. The commission has been working to rebuild energy ties with Iran over the past year, once it became clear that sanctions would likely be lifted. It plans to send an assessment mission to Iran in February to scope out possibilities.

Iran exports small quantities of gas to Azerbaijan, Armenia and Turkey, typically about 9 billion cubic meters a year. Another Iranian gas official said last year that Iran could export about 30 billion cubic meters to the EU in the long term. That estimate is consistent with one EU assessment, which put EU imports at between 25 billion and 35 billion cubic meters of gas a year from Iran by 2030, if LNG facilities are developed.

It is a difficult time to launch new LNG projects, which generally cost billions of dollars and take years to build. The slump in oil prices has hit LNG hard, as consumers typically pay for the product on oil-linked contracts.

On top of that, plenty of new LNG supplies are expected to come into production by the end of the decade. The price for LNG in Asia-the fuel's main market-has collapsed.

Low prices could stimulate new LNG demand from industrial users, said John Hall, chairman of U.K. consultancy Alfa Energy. 'In two years, there will be room for another player in Europe,' he said.

National Iranian Gas Export Co. also plans to invest in gas infrastructure such as distribution networks, plants or pipelines, Kameli said.

Sending Iranian gas by pipeline through Turkey is generally considered the shortest route to Europe, but building the infrastructure enough to increase exports 'doesn't seem feasible' economically, Kameli said

Iran is also talking about supplying gas to its neighbors in the Persian Gulf, notably Kuwait and the U.A.E., which don't have sizable gas reserves and could be supplied with short pipelines.

One possible regional market is Saudi Arabia, Iran's main political rival in the Middle East, which is trying to shift away from using crude oil for power generation. The kingdom has gas reserves that are too expensive to produce at today's prices.

'Saudi Arabia is a big potential customer. They don't have the choice but to approach Iran,' Kameli said. Saudi officials weren't reachable for comment.

Relations between Saudi Arabia and Iran have deteriorated in the past year as the two countries have sided with different interests in wars in Syria and Yemen. Saudi Arabia cut off diplomatic ties to Iran after its embassy in Tehran was set on fire following Riyadh's execution of a prominent Shiite cleric.

Kameli said renewed trading ties could help soothe tensions. 'Piped gas can help political relations between countries,' he said.