Limited impact seen if Iran's natgas exports cut: U.S. EIA

WASHINGTON Tue Oct 9, 2012 1:17pm EDT

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WASHINGTON (Reuters) - A reduction in natural gas exports from Iran would not have much impact on world energy markets, but could hurt Turkey and part of Azerbaijan, according to a U.S. report due to be released on Tuesday.

The report is designed to be used by the U.S. administration as it considers whether to broaden sanctions on Iran over its disputed nuclear program to include sales of natural gas.

"The potential global impacts of restricting Iranian gas exports are limited," the U.S. Energy Information Administration report said.

The report, a copy of which was obtained by Reuters ahead of its publication, was required by the latest U.S. sanctions law against Iran signed in August.

The United States and other Western nations have targeted Iran's energy sector for sanctions as an effort to cut off revenues it believes Iran is using to build nuclear weapons. Tehran has insisted its program is for civilian purposes.

The European Union is poised to ban imports of Iranian gas, a measure it may formally adopt at a meeting of foreign ministers on October 15.

"The (EIA) report gives cover for the administration to broaden sanctions to cover natural gas exports," said Mark Dubowitz, the head of the Foundation for Defense of Democracies, an advocate for stronger sanctions on Iran.

Iran has large reserves of natural gas, but its current exports go mainly to Turkey, which buys more than 90 percent of the output under long term contracts. Armenia and Azerbaijan purchase 6 percent and 3 percent, respectively.

"Clearly, Turkey would be placed in a very difficult position in the event that it is unable to continue importing Iranian natural gas," the EIA said.

A prolonged period without access to Iran's natural gas could "have a major disruptive effect" on Turkish industry, home heating and power generation, the report said.

Congress is also considering tweaks to a U.S. sanctions law that could blacklist a broader range of Iran's energy sector.

(Editing by Tim Dobbyn and Andre Grenon)

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