Miscalculation about gas imbalance/ If no investment is made, we will face a gas shortage

According to IRNA’s report from Iran newspaper, the issue of energy production and consumption imbalance in the country, especially gas imbalance, is not a new issue. As in the last years of the 12th government, this discontent in winter caused not only industrial and petrochemical gas to suffer severe restrictions, but for the first time in the cold months of 2019, we faced widespread and frequent power outages due to lack of fuel.

Although this dissatisfaction was managed in the winter of 1400 by the efforts of the Ministry of Petroleum of the 13th government and despite the severe cold of the winter, we did not face a drop in gas pressure and power cut, and more alternative fuel was provided to the industries to minimize their disadvantage, but the fact is that this Dissatisfaction has not gone away. In other words, this dissatisfaction will definitely increase year by year due to the increase in gas consumption on the one hand and the fields reaching the second half of their life and reducing the pressure of the reservoirs and consequently reducing gas production.

The importance of gas imbalance is so much that the Minister of Oil was called to the Islamic Council on 26 October to explain the various aspects of the country’s gas balance situation. Oil Minister Javad Oji announced that “more than 70% of the country’s energy is supplied by natural gas. Energy consumption in Iran is more than the world average. Also, in the cold season of the year, we have about 240 million cubic meters of natural gas per day. Over the next 8 years, 80 billion dollars of investment in upstream and downstream is needed, so that if the necessary investments are made, gradually we will not have a gas imbalance in the next 3 to 4 years.”

The Energy Commission of the Islamic Parliament, as a related specialized commission, adopted a position similar to that of the Ministry of Petroleum and, while confirming the critical and risky situation of the country’s natural gas production and consumption balance, emphasized the country’s need for serious investment in this sector to increase production from new fields and maintain production. Emphasized existing fields. In fact, two specialized arms in the government and parliament in the field of oil and gas announced the gas deficit and the need for huge investment in this field. Most of the representatives who were behind the parliament tribune also raised more or less similar issues about the oil and gas industry’s need for heavy investments. Of course, this is not a strange thing. The oil industry is considered one of the top industries around the world, and despite its high profitability, this industry cannot survive anywhere in the world without heavy investment.

Despite the announcement of the opinion of the two specialized arms of the government and the parliament and the many reasons that exist regarding the importance of investing in the oil industry for its continued existence, the Speaker of the Islamic Council showed an unexpected reaction regarding the provision of capital needed to maintain and increase gas production.

Ghalibaf emphasized that the country does not have money to invest in the oil industry and we cannot provide the capital needed by the oil industry, and instead of investing in the oil and gas industry, we should go for the optimization of gas consumption. Qalibaf also referred to Article 12 of the Law on Removing Obstacles to Competitive Production and asked why this law was not properly implemented to correct the consumption pattern and optimize gas consumption. He pointed to the contract between the Ministry of Oil and the Metro, which was signed years ago, as one of the examples of this. The following should be taken into consideration regarding the statements of the Chairman of the Islamic Council:

Firstly, the 6th development plan, as an upstream law approved by the parliament, obliges the Ministry of Oil to invest to increase gas production to 1.3 billion cubic meters per day. In order to achieve the goals of this “law” approved by the parliament, at least as much as the oil minister mentioned in the parliament, investment should be made in the upstream of the gas industry. To be more precise, what the Minister of Oil mentioned and what was mentioned by the officials in the past years are actually the resources needed to fulfill this law. If the speaker of the Islamic Council does not consider the implementation of the law approved by the parliament as a priority or if he considers other laws to take priority over this upper law, it is probably necessary to revise the legislative procedure of the parliament in general, because apparently, the speaker does not accept this way of legislation of the parliament. .

Second, no one doubts the importance of optimizing energy consumption. Especially the main supplier of energy is the Ministry of Oil. But has anyone ever asked themselves why most of the energy saving and optimization plans over the past years have not been successful? The reason is clear. Without reforming the price of energy carriers, there is no incentive in the private sector, the government, and the public to participate in optimization projects, and for this reason, in the past decade, no successful projects have been implemented except for the development of gas supply and the replacement of gas with kerosene in this field. .

More precisely, when gas is freely available to public and private power plants, none of these power plants will show the slightest interest in increasing efficiency. With an average daily consumption of 207 million cubic meters of gas per day, power plants are the most important gas consumers, although most of the electricity produced by them is also consumed in the domestic sector. The efficiency of power plants is estimated to be 34% on average, while according to the subsidy targeting law, this industry is obliged to achieve an efficiency of 45% at the end of the fifth development plan. On the other hand, during the sixth development plan, the Ministry of Energy is only allowed to build new power plants with an efficiency of more than 55%. Both legal obligations are left on the ground for a simple reason. As long as there is free gas, there is no reason to invest and increase efficiency, and a large amount of the country’s gas is wasted in this way.

The household sector with a share of 27% of the country’s natural gas consumption portfolio and an average consumption of 171 million cubic meters per day is another important source of natural gas waste.

The way of constructing buildings and monitoring its design, the equipment and materials used in the building such as heating and cooling equipment, doors, windows and its insulation are among the most important components affecting energy loss in the domestic sector, which due to the non-implementation of Article 19 of the National Building Regulations, No action has been taken to implement them. The reason is also simple. Wasting free energy is much more cost-effective than investing in reducing energy waste. Therefore, with the continuation of the existing process, nothing will ever happen to optimize energy consumption in this sector. Now, if Mr. Qalibaf’s statements about gas disharmony mean the support of the Islamic Council and its chairman for correcting the price of energy carriers in an effective way so that the implementation of optimization projects will be economically viable, it should be taken seriously.

Thirdly, among the reasons for the slow progress of energy consumption optimization plans using Article 12 of the Law on Removing Obstacles to Competitive Production, the impossibility of providing initial capital by the investor of the fuel-saving factor, the fluctuations of global fuel prices, the long time of repayment of the resources obtained from the fuel-saving to the saving factor and Finally, the lack of forecasting of the necessary resources in the payment row of note 14 of the annual budget rules and the lack of priority in the allocation of credit for energy consumption optimization plans compared to other obligations of note 14. Moreover, in the same project mentioned by Ghalibaf, i.e. the contract for the development of passenger transport by urban train (metro) in Tehran and eight metropolitan cities, between the Ministry of Petroleum and the municipalities of the metropolitan cities, despite concluding a contract of 764 million dollars in the past few years, the metro in all these years has a figure of approx. 5% of this contract means about 40 million dollars. but this is not the whole story. According to the report of the research arm of the parliament, Article 12 of the law on removing barriers to competitive production has inherent problems in the legislative aspect, which has made it inefficient and unenforceable.

As stated in the report of the Majlis Research Center titled “Review of the performance of Article (12) of the Law on Removing Obstacles to Competitive Production and Improving the Country’s Financial System and its Executive Regulations”, the opaque relationship of this law with Principle 44 Law, the method of monitoring the repayment of investment has been carried out , the uncertainty and unattainability of project reimbursement sources, the lack of transparency in the stages of selecting and implementing projects, not taking into account the necessary incentives to motivate government agencies, and not complying with the principles of form and law writing in the writing of this law, are the flaws that prevent the efficiency and operationalization of this law. have become law

Speaker of the Parliament asked in the meeting on 26 Mehr, what is the reason that we do not implement the law to optimize energy consumption? Here is part of the answer.

The operational and efficiency law has not been written, and the research arm of the parliament has pointed out its problems years ago. But during these years, the Parliament has not taken any action to amend this ineffective and defective law. Now, if the concern of the implementation of Article 12 of the law on removing barriers to competitive production is real and serious for the speaker of the parliament, it would be better for the implementation of this law in the first place to remove the obvious flaws that the research center of the parliament has found in the law, and then look for the other reasons for the non-implementation of the law. to turn

Fourth, despite the fact that energy optimization is mandatory, it should not be forgotten that the severity of the gas imbalance is so great that only by optimizing its consumption in the medium term, the gap will not be filled, and even with the implementation of all the projects defined in this section. Also, the need for investment to maintain and increase gas production will not disappear, because the country is developing and every year we see an increase in new industries and power plants, new residential units, the development of freight and passenger transportation, and the development of other service sectors. It needs fuel, especially gas.

Fifth, perhaps the worst expression that the speaker of the parliament used in the gas reconciliation meeting is the term “begging in the hand” to provide the resources needed to invest in the oil and gas industry by using the revenues of this industry or by allocating 10% of the resources of the National Development Fund to the oil industry. And it was gas.

Investing from the resources obtained from the oil and gas industry in this huge industry is the most realistic measure that will minimize the risks of the country in the field of energy security. In addition, all the successful oil countries of the world also act in the same way. From Norway as one of the most successful examples of managing the oil industry to the countries of the Middle East, everyone knows that the survival of the oil industry is dependent on the investment of a part of its resources in the industry itself, and without it, all income sources from the oil and gas industry will quickly disappear. It means that the most important source of national income of Iranians will be depleted and destroyed.

Now, if this self-evident principle is interpreted in the authorities’ literature as taking a begging bowl, and such interpretations about this industry become common literature in the decision-making environments of the country, in the coming years, we will see an intensification of the imbalance of energy production and consumption, and as a result, economic stagnation and decline We will be energy security.