Letter from the Middle East: Iran’s gas sector under pressure

Tehran’s gas industry faces two old and two new problems

The damage that US sanctions have wreaked on Iran’s oil exports is well-known. Less widely discussed are the effects on its gas industry. As negotiations in Vienna on the nuclear deal heat up, domestic gas is one of Tehran’s biggest concerns, and the country faces four challenges: two old and two new. Iran is holder of the world’s second largest gas reserves and is the third biggest producer of the fuel, but it also—remarkably for a medium-size country—behind only the US, Russia and China as a consumer. A mostly gasified power sector, the connection of even remote settlements to the grid, a cold winter climate, the rapid expansion of gas-based industry, and a legacy of subsidies and ineffici