SADRA joins LNG elite

Iranian shipbuilder SADRA is reported to have signed a deal with Belgium’s Exmar to build 10 LNG carriers to export Iranian liquefied natural gas even though Iran’s efforts so far to produce the fuel are deadlocked.

The total value of the 10 ship contract would be $2.4 billion and this could rise if SADRA manages to sign another deal for four more ships. A spokesman for the shipbuilder said that the first LNG tanker will be ready in four and half years with the remainder being delivered at six monthly intervals. Much of the technology will be transferred partly from Belgium and partly from other countries while Iran’s added value on each ship will be $80 million.

Exmar is looking to tap phases 11 to 13 of the South Pars field, which sits on the world’s biggest reservoir of natural gas. Despite having the world’s second biggest reserves of natural gas after Russia, Iran has lacked the investment and technology to develop its reserves for export.

Qatar, which draws its gas from the same reservoirs as Iran, has long been an established exporter of LNG.

Iran is only pencilled in to start production of LNG in 2009 but commercial and political complications have weighed on the projects to develop LNG, in part because of the involvement of foreign contractors such as Shell, Total and BG. There is no mention of what contingency plan Exmar might have if Iran fails to produce any LNG.