Gas industry of Iran
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Iran ranks second in the world after Russia in terms of natural gas reserves.
Iranian gas production is rapidly increasing. Key gas field - South Pars. 70% of the country's gas production comes from this field. Production rate is 716 mcm/d as of June 2025.
Iran's domestic gas market is the fourth-largest in the world. It totaled at 265 billion cubic meters per year in 2025.
USA has prevented Iran from entering the global LNG market.
Map of gas industry
Reserves
Iran ranks second in the world after Russia in terms of natural gas reserves.
Key asset is South Pars (Iranian part)/ North Field (Qatari part) field, which is a joint field with Qatar.
Natural gas production
Despite Iran has been under “sanctions” for many years, the country has been increased gas production at very high pace.
Gas production per year:
2003 – 82.7 bcm,
2008 – 132.4 bcm,
2013 – 166.6 bcm
2023 – 251.7 bcm.
As of 2025 70% of the country's gas production comes from South Pars.
In June 2025, Iran successfully launched the fourth gas treatment complex at the 14th phase of South Pars gas field. Overall production rate increased up to 716 mcm/d as a result.
Selected aspects of the domestic gas market
Iran's domestic gas production is the fourth-largest in the world, at 265 billion cubic meters per year. Demand has tripled from 2003 to 2023.
Absolute majority of produced natural gas is used to meet domestic demand.
Energy crisis
In December 2024 the country once again faced an energy crisis.
Due to shortage of gas, the government had to make a choice - to reduce supplies to the population or to power plants. Gas and heat in homes turned out to be a higher priority (about 90% of all homes in Iran use gas for heating and cooking). At some point, 17 power generation facilities were suspended simultaneously. Industrial enterprises that depended on electricity supply also paused.
The gas deficit was estimated at 350 million cubic meters per day in December. Its reasons are explained by the lack of foreign investment, mismanagement, and corruption. However, Iran's problem is primarily a growth disorder related to the lack of a necessary gas storage system (underground gas storage facilities - UGS).
UGS
At the moment, Iran has only two underground storage facilities (Shurije and Seraje). Their combined capacity is approximately 3.5 billion cubic meters, and the possibility of maximum daily gas extraction at the beginning of the season is 0.03 billion cubic meters. Peak consumption in winter is more than 0.85 billion cubic meters. m per day. In other words, only 3.5% of peak consumption can be extracted from UGS per day (in Russia, this figure is approximately 42-45%). Winter deficit of 0.25–0.3 billion cubic meters. m per day is a common thing for Iran.
Plans to create new UGS facilities have been announced in the past, but they have not yet been implemented. According to existing forecasts, by 2028, the daily capacity of Iranian storage facilities should reach 0.1 billion cubic meters. Although with peak demand of 0.85 billion cubic meters, for increased reliability, it is necessary to increase the daily extraction capacity to 0.4 billion cubic meters.
Gas-fired power generation
Iran is one of the leaders in gas generation. Installed capacity of gas-fired TPPs in the country is 43.2 GW. Theoretical maximum demand from gas generation is 440 mcm/d. Gas-fired thermal power plants provide 86% of the country's power generation.
Production and export of methanol
Iran is one of the world's largest producers of methanol (methyl alcohol).
In 2024, production capacities amount to about 22 million tons per year (10% of the global market). The plans are to increase the capacity to 42 million tons by 2029.
About 1 billion cubic meters of gas are required to produce 1 million tons of methanol.
Iran's methanol exports totaled 9 million tons in 2024. In 2004, it was only 300 thousand tons.
Importers of Iranian Methanol:
China - 7.5 million tons (83% of Iran's total exports, 56% of China's total imports).
India - 1.5 million tons (17% of Iran's total exports, 51% of India's total imports).
LNG
There are no LNG projects in Iran due to both the technological and financial blockade of the country by Western countries and the growing domestic demand for gas.
Export - import of pipelined gas
Before Trump came and increased pressure on Iran, the country exported about 10-14 billion cubic meters per year. Key importers of Iranian gas are Türkiye and Iraq (about 87% of overall export volume).
Iraq
In March 2024, an agreement was signed between Iran and Iraq for the supply of up to 55 million cubic meters of natural gas per day.
In 2025, the US administration banned Iraq from importing Iranian gas as part of its increased pressure on Iran. Iraq does not have enough sovereignty to overcome US pressure. At the same time, the abandonment of Iranian gas causes problems in Iraq's gas balance during periods of high demand (the third quarter).
At the same time, against the background of growing domestic consumption, export shipments to Iraq decreased in April - August to 25 million cubic meters per day.
Pakistan and India
The Iran–Pakistan–India gas pipeline project is an interesting one. Its planned length is 2,775 km and its capacity is 55 billion cubic meters. Formally, the project is under implementation, but in reality, progress on it began only last year.
The reason for the delay is the inconsistent position of Pakistan. On the one hand, Pakistan wants to get a reliable source of gas and money for its transit to its neighbors. On the other hand, the senior partners very persistently asked her not to engage in IPI. Pakistan needs this pipe, India needs this pipe, but the project is stalling.
Russia is also interested in the implementation of the project, as the highway can open the Indian market for our country. Thanks to it, Russian gas could flow to the north of Iran. This scheme is also interesting for the Islamic Republic itself, since Iran's gas production centers are located in the south of the country, and supplies to the north are difficult.
Moreover, the owner of the second largest reserves in the world periodically faces a shortage of supplies in the domestic market.
Russia
Russian gas supplies to Iran, which, according to the agreements reached in January 2025, should go through Azerbaijan, may partially alleviate the problem of gas supply in conditions of insufficient UGS capacity. Especially in the northern regions of the country.
Now we are talking about the initial 2 billion cubic meters. m per year with the prospect of increasing to 55 billion cubic meters . m per year (about 0.15 billion cubic meters m per day). The price formula is currently being discussed. The issue is not easy because of the really low prices in the domestic market of the republic. The government will have to find funds to compensate for the difference, so it is extremely interested in minimizing the purchase price. The deliveries themselves, apparently, can be arranged in a fairly short time.
Turkmenistan and Türkiye
In March 2025, Türkiye, Turkmenistan and Iran signed a geographical gas swap deal. Turkmenistan supplied gas to northeastern Iran, and Iran, in turn, supplied gas to Türkiye via the Iran-Türkiye gas pipeline. The transit volume is 1.3 billion cubic meters per year. The term of the deal is 1 year.
Impacts of wars
War of Isreal and USA against Iran in 2026
18.03.2026 - Israel attacked South Pars field. As a result of the attack, gas production infrastructure was damaged. Gas production decreased significantly, and exports outside of Iran stopped.
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