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Sun 27 Sep 2009 08:38 PM

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Iran oilmin expects winter gas shortage - paper

First diesel cargoes in 6 months to augment gas already being burned in power plants.

Iran will be short of around 200 million cubic metres per day of gas this winter due to rapid growth in demand, a daily newspaper reported Iran's oil minister as saying on Sunday.Iran has bought its first diesel cargoes for six months in September to supplement gas it is burning in power plants.

The country sits on the world's second-largest gas reserves but has failed to develop them fast enough to meet domestic demand.

More diesel imports would increase Tehran's vulnerability to potential US sanctions to target fuel suppliers to the Islamic Republic.

US politicians are considering sanctions on fuel suppliers to increase pressure on Iran to halt its nuclear programme. Iran relies on imports to meet up to 40 percent of its gasoline demand.

Fuel subsidies were contributing to waste and rapid demand growth and gas consumption was up on the year by around 30 percent, Iran's Oil Minister Massoud Mirkazemi was reported as saying by daily Abrar.

"It seems because of the protective (subsidy) policies, in all fields, waste is prevalent ... Growth in gas consumption in the first half of the current year exceeded average consumption in the corresponding period last year by 30 percent."

Earlier this year, Iranian officials were so confident gas supplies would be sufficient to meet demand that they allocated no money from the federal budget for diesel imports.

Then, officials said increased output from the world's largest pure gas field at South Pars would be enough to meet demand.

Mirkazemi said Iran's gas industry was lacking around $16 billion in funding.

"There are around $19 billion worth of incomplete projects in the gas industry for which there are only $3 billion of budget allocated," Abrar reported him as saying. Iran pumps large volumes of gas back into oilfields to maintain underground pressure and maximise the oil flow. (Reuters)

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