In early September 2022, Iranian Oil Minister Javad Ouji warned of a cold winter and potential gas shortages. But he was addressing Europeans instead of his fellow citizens. “You are badly governed,” the minister said in a televised interview, citing Europe’s concerns that its industrial production and households would suffer due to reduced gas supplies from Russia due to sanctions in response to its invasion of Ukraine.
At the time, Iran offered itself as an alternative source of natural gas and saw a strengthened position in international negotiations to curb its nuclear program. “We have the second largest gas reserves in the world and we can supply Europe,” Foreign Ministry spokesman Nasser Kanaani said in early September. But before that happens, US economic sanctions against Iran will have to be lifted.
However, Iran would not respond to negotiators’ demands for closer cooperation with the International Atomic Energy Agency, and Tehran’s plan failed. Meanwhile, the energy crisis in Europe has eased. Officials say supplies are now stable in Germany, which was particularly dependent on Russian gas before the war in Ukraine began.
Also, about three months later, a familiar problem returned to Iran: gas shortages due to ailing infrastructure.
“Dress Warmer at Home”
The country is experiencing technical problems with gas production, the oil ministry confirmed. Earlier this week, the oil minister warned people to conserve supplies.
In an interview with the official Shana news agency, which covers the industry, he advised citizens to “dress warmer at home and reduce consumption: those who use too much gas can expect to have their supplies cut off.”
“No one can say, ‘I will pay for what I consume,'” Ouji added.
By Thursday, government authorities in one northeastern province had closed all offices until Sunday to conserve electricity and gas.
Technical problems plague Iran’s gas production. Here, a partially constructed refinery at the South Pars gas field in 2014. Image: Vahid Salemi/AP Photo/picture alliance
“Outrageous!” a young mother from Tehran told DW in response to the announcement. “For the last three or four years, we have seen the same theater every time there is a cold snap. Every snowfall paralyzes the country as authorities and schools are closed to save energy.”
This winter was no exception: since mid-December, government offices and schools in various provinces in the country of 84 million people have been closed for weeks to conserve gas. Still, dressing warmer at home is unusual for the 37-year-old mother, like many other Iranians who are used to having warm homes heated by cheap gas. Iran may have vast energy reserves, but it tends to use them inefficiently.
“Iran is suffering from overconsumption of natural gas and other energy sources as a result of extremely low energy efficiency,” said David Jallivand, who heads the Berlin-based consultancy Orient Matters. “Subsidies, which aim to ease the economic hardships of the population and stimulate the economy, are an important factor here,” he told DW. “Several attempts to cut subsidies have failed due to the precarious situation of many Iranian households.”
The cold weather in Tehran has led to a strain on gas supplies. Image: Rouzbeh Fouladi/ZUMA Press Wire/Photo
High consumption in industry
Iran also struggles with high energy consumption in almost all industrial sectors, especially iron, steel and cement production. According to the German Federal Institute for Geosciences and Natural Resources, Iran ranks fourth in the list of countries with the highest global gas consumption in 2020, trailing only the US, Russia and China.
“Over the past two decades, Iran has been able to significantly expand its natural gas production,” Jallivand said. “But production remains underdeveloped relative to the size of Iran’s reserves. Lack of access to key technologies due to US sanctions also plays a role. Iran will not have significant capacity to increase its gas exports for the foreseeable future.”
Competition or cooperation with Russia?
Tehran and Moscow plan to cooperate more closely in response to US sanctions both countries face. In July 2022, Russian energy company Gazprom signed a $40 billion (€36.8 billion) cooperation agreement with Iranian oil company NIOC to help it develop two gas fields and six oil fields.
Jallivand is skeptical of this arrangement: “After all, Moscow has no interest in building a powerful competitor in global markets, especially since Russian sales markets have become significantly smaller due to sanctions.”
Russia offers oil and gas at significant discounts to countries such as China, India and Turkey – all traditional customers of Iran. Turkey, for example, until recently imported gas from Iran, but is now negotiating a 25% discount for gas from Russia. Bloomberg news agency also reported in December that the Turkish government wanted to extract a retroactive rebate for gas imports already paid for this fall.
This article originally appeared in German.
Add Comment