The Birth Of An LNG Superpower

The first part of this co-operation will be the completion of the smaller LNG units, which will presage the roll out of the bigger units. These smaller LNG units are extremely closely based on the designs and technology of a series of ‘mini-LNG’ complexes that were to have been funded and developed by various South Korean entities before the U.S. sanctions hit last year. Indeed, in keeping with all such technology-centric agreements signed by Iran, this agreement - between South Korea’s Minister of Land, Infrastructure and Transport, Kim Hyun-mee, and Zangeneh - involved the patent rights to the technology and the development of required personnel being shared by South Korea with Iran, in the form of its LNG Institute of Tehran University, the Research Center of the Petroleum Industry (RIPI). This deal was to have included a financing mix comprising Exim Bank’s initial €8 billion credit line to Iran and another €2.3 billion from two other South Korean companies geared towards building up a large number of LNG facilities that had production capacities ranging from 2,000 to 500,000 tons of LNG per year. This compares to a typical large scale plant capacity of between 2.5 and 7.5 million tons per year. “Such complexes have three key advantages in the current circumstances,” said the Iran source. “First, they are individually cheaper than the bigger plants, second they are quicker to build and start producing, and third they can be built anywhere and so are difficult to detect even by U.S. or Israeli satellites,” he added.  This, in fact, is what Mansourian was really announcing.

The second phase after this is the roll out of the full ‘Iran LNG Project’, an LNG complex that was actually begun by German engineering giant Linde but abandoned after sanctions were ramped up in 2012, and again when they were reintroduced last year, forcing Linde’s withdrawal from Iran. Originally estimated to cost US$3.3 billion, the flagship LNG export facility near Tombak Port - that was set to produce at least 10.5 million tons per year of LNG – had been 60% completed, with expectations that it would take less than a year to finish. With the implementation of the Joint Comprehensive Plan of Action of 18 January 2016, hopes had been high that Linde would take up where it left off, particularly when Linde was awarded a sweetener contract shortly afterwards for the front end engineering design of the olefin unit of Kian Petrochemical and the subsequent re-opening of Linde’s office in Tehran. Despite the re-imposition of U.S. sanctions last year, though, Linde’s chief executive officer, Aldo Belloni, has signalled that he is not against the project itself, saying last year that the company had to wait to find a way to transfer money out of the country before proceeding with its Iran investment plans. Linde’s involvement – or that of South Korea – nonetheless appears sidelined for the time being but Russia obviously is willing and able to provide all of the necessary technology – in tandem with China if needed – together with the US$4 billion investment estimated is needed to move ahead meaningfully on making Iran a global LNG power. Related: Fed Warns Climate Change Is Biggest Threat To The U.S. Economy