Energy Crisis in Iran; Gas Supply to Steel Industries Halved

A member of the Steel Industries Association has reported severe restrictions on gas supply to this industry since last month. Vahid Yaqoubi stated on Wednesday, November 22, to the Tasnim news agency that while gas restrictions in previous years were implemented in mid-December, last year they began in late November and this year from mid-October. According to him, gas restrictions for steel industries started at 20% and have reached 50% in some units: "This has led to a 50% reduction in production. Over 70% of the steel chain is conducted in sponge iron, and the decline in production in the sponge iron sector will significantly impact the country's steel production. Iran used to face a massive gas deficit only in winter, but last year the gas deficit began in autumn, and this year we have witnessed a gas deficit in all seasons; so much so that in the first half of this year, the consumption of mazut and diesel in power plants surged by 100% and 80% respectively, and the liquid fuel reserves of power plants have severely declined. The drop in mazut and diesel reserves, along with the severe gas deficit, has led the government to halt the operations of three power plants in Karaj, Isfahan, and Arak in recent days and to implement nationwide blackouts. The government had also significantly reduced electricity supply to industries, especially in the steel sector, due to severe electricity shortages last summer. Statistics from the World Steel Association indicate that Iran's crude steel production in the summer of this year fell by 45% compared to spring, reaching 4.7 million tons. Yaqoubi also mentioned that energy restrictions on steel industries over the past three and a half years, from 1400 to the first six months of 1403, have resulted in a loss of production value amounting to 310 trillion tomans. BP's statistics show that the average annual growth rate of gas production in Iran over the past decade was above 5%, but in the last three years, it has dropped to 2%, exacerbating the winter gas deficit. Iran faces a daily gas deficit of 250 to 300 million cubic meters in winter, a massive figure equivalent to Turkey's total gas consumption in winter. The reason for such a significant difference in gas consumption between Iran and Turkey is that gas accounts for 70% and oil for nearly 30% of Iran's energy supply, while Turkey's energy mix is much more diverse. For instance, Turkey produces 30 times more solar and wind energy than Iran. Iran also loses 80 million cubic meters of gas daily during production and transmission, and thermal power plants with low efficiency and outdated technology account for 33% of the country's total gas consumption. Despite the increasing gas deficit, Iran has increased gas exports this year. For example, official statistics from Turkey indicate that in the first eight months of this year, it received 4.2 billion cubic meters of gas from Iran, which is 400 million cubic meters more than the same period last year. Iran also exports gas to Iraq. Last year, Iran exported 12 billion cubic meters of gas to Iraq and Turkey, and if it had used that in power plants, it would not only have avoided burning mazut and experienced cleaner air but would also have reduced the country's diesel consumption by 4 billion liters.