24 R. MILLS
might have dampened down tensions and would have been hard for the
USA to target with sanctions.
Finally, LNG exports have made little progress, despite long negotiations with Shell, Repsol, Total and China National Petroleum Corporation (CNPC), as well as smaller firms. The difficulty of accessing
specialised equipment and financing under sanctions, a lack of commercial realism, shortages of gas until quite recently, and domestic political
opposition, has made LNG exports particularly intractable.
Thus, most of growing gas output was directed to the domestic
market, which grew rapidly because of deliberate policies and because
of low, subsidised prices. Under the 2010 subsidy reform, gas prices
were intended to rise to 65% of the export price, after taxes and transport costs, for industry and 75% for domestic use, 18 and electricity prices
were also raised. With careful planning and the deposit of compensation
in special bank accounts, this passed off with little unrest. Inflation and
currency devaluation have required several subsequent rounds of price
rises, while the improvement in the government budget has been limited
by rising non-payment of residential bills. Despite or because of the difficulty of procuring equipment under sanctions, Iran’s domestic industry
became quite capable at building offshore gas production platforms and
domestic pipelines. By 2019, its domestic primary energy mix was 65%
gas, amongst the highest rates in the world. As a medium-sized country
in economy and population, the volume of domestic gas consumption
was the fourth highest in the world, behind only the USA, Russia and
China.
Because of this rapid demand growth, Iran did suffer gas shortages,
usually during the winter high-demand period. These mostly eased by
2017, due to the delayed completion of several phases of the South
Pars development. However, shortages recurred in January 2020, possibly
because of technical problems at South Pars, and potentially also because
of the need to shut-in gas production to avoid over-production of
condensate, which cannot be exported due to US sanctions or refined
due to delays in refinery upgrades. In view of these issues, and the high
reliance of the power sector on gas, alternative generation has again
gained attractiveness.
Climate policy has not been a major contributor to Iran’s energy plans.
Its Nationally Determined Contribution (NDC) under the Paris Agreement (2015) refers to renewable and nuclear power quite generally. 19
might have dampened down tensions and would have been hard for the
USA to target with sanctions.
Finally, LNG exports have made little progress, despite long negotiations with Shell, Repsol, Total and China National Petroleum Corporation (CNPC), as well as smaller firms. The difficulty of accessing
specialised equipment and financing under sanctions, a lack of commercial realism, shortages of gas until quite recently, and domestic political
opposition, has made LNG exports particularly intractable.
Thus, most of growing gas output was directed to the domestic
market, which grew rapidly because of deliberate policies and because
of low, subsidised prices. Under the 2010 subsidy reform, gas prices
were intended to rise to 65% of the export price, after taxes and transport costs, for industry and 75% for domestic use, 18 and electricity prices
were also raised. With careful planning and the deposit of compensation
in special bank accounts, this passed off with little unrest. Inflation and
currency devaluation have required several subsequent rounds of price
rises, while the improvement in the government budget has been limited
by rising non-payment of residential bills. Despite or because of the difficulty of procuring equipment under sanctions, Iran’s domestic industry
became quite capable at building offshore gas production platforms and
domestic pipelines. By 2019, its domestic primary energy mix was 65%
gas, amongst the highest rates in the world. As a medium-sized country
in economy and population, the volume of domestic gas consumption
was the fourth highest in the world, behind only the USA, Russia and
China.
Because of this rapid demand growth, Iran did suffer gas shortages,
usually during the winter high-demand period. These mostly eased by
2017, due to the delayed completion of several phases of the South
Pars development. However, shortages recurred in January 2020, possibly
because of technical problems at South Pars, and potentially also because
of the need to shut-in gas production to avoid over-production of
condensate, which cannot be exported due to US sanctions or refined
due to delays in refinery upgrades. In view of these issues, and the high
reliance of the power sector on gas, alternative generation has again
gained attractiveness.
Climate policy has not been a major contributor to Iran’s energy plans.
Its Nationally Determined Contribution (NDC) under the Paris Agreement (2015) refers to renewable and nuclear power quite generally. 19