Iranian gas; Abundance of reserves and shortage of consumption

Increasing the distance between gas production and consumption, in addition to limiting fuel supply to industries and power plants, has imposed significant costs on the economy.

Arjan Ambassador of Economy Group - Tayyaba Bayat: Perhaps one of the most frequently mentioned statistics is that Iran, with 32.3 trillion cubic meters of natural gas reserves, is the second largest owner of this energy source in the world; The capacity that has made gas the main pillar of the country's energy supply in the past decades. However, the extent of underground resources has not been able to prevent the formation of a growing gap between production and consumption; A gap whose effects have gone beyond the limitation of refueling in the cold days of the year and has become one of the factors affecting the activity of industries and electricity production.

According to the available data, about 70% of the country's energy consumption portfolio is directly dependent on gas. Such a wide dependence makes any disturbance in the balance of supply and demand not limited to only one sector and has its effects in a chain of economic activities; From providing heating for households to the production of steel, cement, petrochemical products and electricity.

Examining the trend of gas imbalance also indicates the gradual aggravation of this problem. The average daily gas deficit, which was estimated at 155 million cubic meters in 2019, reached 174 million cubic meters in 1401, and according to some statistics, it increased to about 200 million cubic meters per day in 1404 before the recent developments. In peak days of winter consumption, this distance can exceed 300 million cubic meters per day.

These figures show that gas imbalance is no longer just a seasonal issue; Rather, it has become a structural limitation whose management requires decisions beyond increasing production and temporary recommendations to reduce consumption.

winter; Season of transferring the cost of disharmony to the economy

The household sector has a special place in this equation. According to the statistics of 1403, the average share of households in the country's natural gas consumption was about 28%; The share that increases to about 46% in the peak of the cold season. The growth of heating demand in this period puts more pressure on the network and the priority of supplying gas to domestic consumers reduces the possibility of delivering fuel to some industrial and power plant sectors.

The industrial gas restriction in the winter of 1403 reached an average of 55% and at the same time as the electricity restriction, the total unprofitability of the production sector increased to more than 303 thousand billion Tomans. The consequences of this situation can be seen in the performance of industries. According to the data provided by the Ministry of Industry, Mining and Trade, in the winter of 1403, the industries of the country were facing an average of 55% restriction in receiving gas. The estimated damage caused by these restrictions has been announced to be around 130 thousand billion tomans.

In addition to the amount of restriction, the lengthening of its period is also important. The number of industrial gas restriction days has increased from 75 days in 1402 to 111 days in 1403. The continuation of these conditions makes production planning more difficult and affects companies' ability to manage costs, deliver products on time, and make decisions about new investments.

Industrial gas restrictions, along with electricity imbalances, provide a broader picture of the costs of energy shortages. The estimates of the Ministry of Security show that the total loss due to gas and electricity restrictions in 1403 is 303.5 thousand billion tomans; A figure that shows the economic dimensions of disruption in energy supply in the production sector.

In such a situation, it is not just a question of providing fuel on cold days; Rather, it is the amount of production that can be maintained with sustainable access to energy and the damage that can be prevented with better resource management.

Increasing gas production capacity, field development and maintenance of existing facilities are still important axes of the country's energy policy; But these paths require significant investment and time. On the other hand, demand management makes it possible to make a part of the available gas available, without relying on a proportional increase in production, by reducing waste and improving productivity.

The importance of this approach becomes clearer when the cost of providing energy from two different routes is compared. According to the estimates presented in the documents related to the country's gas balance, the cost of releasing each unit of gas through optimizing household consumption is about 75% lower than the cost of increasing production. Also, in the proposed model for the implementation of Karver gas project, the investment of about 20 billion dollars of the private sector is predicted within five years; While the estimated investment required for projects to increase production is more than 70 billion dollars.

In the framework of the Carver Gas Plan, the investment of 20 billion dollars by the private sector in five years and the daily release of 197 million cubic meters of gas in the cold period of the year are predicted; A capacity whose realization depends on the effective implementation of the plan. Of course, these figures are estimates related to two different paths of energy supply, and their realization depends on the implementation conditions, the provision of financial resources, and the actual performance of optimization plans. However, the aforementioned comparison shows that consumption management can have an economic place in energy policy along with supply development.

In the same framework, Karver gas plan is defined as a plan with operational capability and with the aim of introducing investors and companies active in the field of optimization to the consumption reduction process. The basis of this approach is that instead of meeting all future needs through increased production, part of the resources will be freed by reducing unnecessary consumption and improving equipment efficiency.

The estimates of this plan indicate the possibility of daily release of 197 million cubic meters of gas in the cold periods of the year; A figure that, if fully realized, would be equivalent in terms of volume to a large part of the daily volatility reported in recent years. However, the conversion of this estimated capacity into real savings depends on the amount of investment, the scope of the plan implementation and the effectiveness of the installed equipment.

It's not just about consumer behavior

In the discussion of gas imbalance, the recommendation to reduce household consumption is usually one of the first solutions that come up. Reducing the ambient temperature, using heating devices correctly and avoiding unnecessary consumption can help control demand in the short term; But relying only on changing the behavior of households does not cover all the available capacities to reduce consumption.

Part of gas consumption is related to the quality of buildings, insulation and efficiency of heating equipment. In these cases, even a household with a conventional consumption pattern may need more gas to provide heating for the same space due to the use of low-efficiency equipment.

The data presented about household gas consumption also highlights this issue. According to the surveys, gas consumption per square meter of residential infrastructure in the first income decile is about 23 cubic meters and in the tenth decile about 17 cubic meters. This difference shows that the amount of consumption cannot be explained solely by the level of household income, and the quality of the equipment and the condition of the building also play a role in it.

Gas imbalance cannot be attributed solely to the behavior of consumers; The quality of buildings and the efficiency of heating equipment are also effective in the amount of consumption, and the replacement of low-efficiency heaters can reduce part of the winter demand. Also, the cited studies show that the average gas consumption in different welfare deciles does not differ significantly. Although in a small group of subscribers with very high consumption, the use of facilities such as villas and swimming pools can increase the share of consumption, this group alone does not explain the dimensions of the country's disharmony.

According to the data provided, one tenth of the subscribers in the high consumption group account for half of the total gas consumption. Therefore, if consumption reduction policy focuses only on limiting luxury consumption, it will ignore much of the saving capacity.

From this point of view, optimization of home consumption should focus on improving technology and reducing energy waste in addition to improving consumer behavior; An approach that can provide the basis for reducing consumption without imposing the same costs on different households.

Worn out heaters in the gas saving center

One of the important axes of optimization is the replacement of worn out heating equipment. According to the estimate of the fuel consumption optimization company, there are about 20 million low-efficiency heaters in the country, and the average daily consumption of each of them is about 12 cubic meters of gas.

According to the same estimate, replacing these equipment with heaters with energy rating A can reduce their gas consumption by half. Such an action, in case of widespread implementation and compliance with technical standards, creates a significant capacity to reduce gas demand in the cold season.

The advantage of this solution is that savings will be less dependent on the daily decision of the consumer. While the effect of consumption campaigns depends on household behavior and environmental conditions, high-efficiency equipment can continuously reduce energy consumption during the period of use.

Of course, replacing the equipment alone is not enough. Financing, households' access to standard devices, proper implementation of plans and monitoring of equipment performance are among the factors that determine how much of the theoretical capacity of saving will turn into a real result.

On the other hand, consumption optimization can also create new economic activity. Production and installation of heating equipment, improvement of building insulation, development of smart meters and maintenance services are among the sectors for which the implementation of extensive productivity improvement programs can increase the demand for them.

Saving gas helps industries

The economic value of reducing gas consumption becomes clearer when the consequences of energy restrictions in different sectors are examined. In the conditions of gas shortage, industries face a reduction in production capacity and power plants may be forced to use more liquid fuels. As a result, the pressure caused by unbalance can simultaneously affect the cost of electricity production, the performance of industries and the quality of the environment.

On the other hand, the release of a part of the consumed gas through optimization allows the re-allocation of this resource to the sectors where the fuel restriction has led to a decrease in production or an increase in cost. Of course, the amount of this effect depends on how the saved gas is allocated and the coordination between different energy sectors.

The gas released from the optimization path can help provide fuel for industries and power plants; An approach that, along with the development of gas fields, provides the possibility of reducing production restrictions and better management of energy resources. In the meantime, a distinction must be made between increasing production capacity and decreasing demand. The development of gas fields and the maintenance of facilities will strengthen the supply capacity; While optimization covers part of the need with less consumption. These two paths are not necessarily substitutes for each other and can play a complementary role in a comprehensive energy supply plan.

Finally, gas imbalance cannot be managed with only one tool or in one sector. Increasing production, improving equipment efficiency, reforming the consumption structure and reducing waste, each of them targets a part of the problem. In the meantime, the more technical and sustainable routes are saved, the possibility of planning to supply gas to households and maintain the activity of the production sector will also increase.

In this way, optimizing gas consumption is not just a program to reduce household bills; Rather, it can become an economic tool to reduce the pressure on the energy network and limit the damage caused by fuel shortage. The importance of this path is especially greater in the situation where the gap between supply and demand is increasing and the development of new capacities requires considerable time and financial resources.