Iran News ...


US Unable to Paralyze Iran's Oil, Gas Sector

TEHRAN (Fars News Agency)- A string of recent natural gas deals involving Iran has raised eyebrows in Washington, including a substantial supply agreement with Switzerland and two other deals involving Malaysia and Oman.

South Pars Gas Platform

Following such deals, the US administration sought to put heavy pressures on western states and companies to refrain from cooperating with the Islamic Republic. As a result, Royal Dutch Shell and Spain's Repsol switched their roles in Iranian natural gas development project; the two oil giants pulled out of an imminent project that was estimated to be worth over $10 billion and picked up a share in long-term deals.

Shell and Repsol executives did not publicly comment on their reasons for pulling out of South Pars. But whether it was due to concerns about the deal's financial viability or the result of US political pressure, or both, the decision would have been welcomed by the Bush administration.

In addition to having the second-largest oil reserves in the world, Iran also has the second largest quantity of natural gas in the world (behind only Russia), with an estimated 15 percent of global reserves. As Iranian gas reserves are relatively undeveloped, the country has much potential to become a major global supplier.

Iran's potential as a natural gas player has considerable geopolitical implications given the state of its relationship with the United States. Iran's huge natural gas reserves are getting greater attention from Asian energy-consuming nations, and this poses a dilemma for the American strategy to economically isolate Iran as part of a larger effort to pressure Tehran to give up its nuclear rights as a signatory to the Non-Proliferation Treaty (NPT).

A case in point is the proposed Iran-Pakistan-India (IPI) pipeline, a controversial project that has involved a struggle for influence over India's foreign energy interests between Washington and Tehran. Plans to construct a pipeline from Iran to Pakistan and India go back as far as the mid 1990s, but financing, pricing and political issues (between Pakistan and India) as well as Washington's heavy pressures on New Delhi to give up the case prevented this project from coming to light.

When the US and India signed the Civil Nuclear Agreement in March 2006 (the agreement is still to be ratified by either country), there was some hope in Washington that assistance with the development of India's civil nuclear program may lessen New Delhi's interest in acquiring Iranian natural gas.

Although the White House claimed proliferation concerns rather than India's energy relations with Iran were the main American motivation for pursuing the nuclear agreement, a decision by New Delhi to forego participation in the IPI project would have put the icing on the cake for Washington.

Yet India's projected energy needs are substantial, and while New Delhi - to the chagrin of Tehran - voted for referral of Iran's nuclear file to the UNSC at an IAEA Board of Governor's meeting, but India never failed to reiterate its commitment to strengthening relations with Iran. New Delhi has recently changed its approach and underlined its support for Iran's nuclear rights as India maintains a strong interest in securing supplies of Iranian natural gas. As far as India is concerned, its nuclear negotiations with the US and its attempts to secure Iranian energy supplies are two separate issues.

Indian Minister of External Affairs Pranab Mukherjee said in May, "Persian Gulf Countries are now adopting a 'Look East' policy by looking beyond their traditional investment partners in the West. Given the Persian Gulf's vast oil reserves and geographical proximity, Persian Gulf and India will remain long partners in energy sector but the challenge is to transform the present buyer-seller relationship into something more substantial and enduring, covering all economic sectors, including energy to education and health," he said.

Also in another sign of India's accelerated intimacy with Iran, New Delhi in April reacted sharply to US pressure on its advice on dealing with Iran, making it clear that India and Iran are capable of managing all aspects of their bilateral relations.

The Indian foreign ministry said neither country needed "any guidance on the future conduct of bilateral relations" as both countries believe engagement and dialogue alone lead to peace.

The US Deputy Spokesman Tom Casey had wanted India to advise Iran to give up its NPT right of uranium enrichment activities in line with the UN Security Council's demands during Ahmadinejad's visit to New Delhi.

A terse statement by the foreign ministry spokesman said India and Iran were ancient civilizations whose relations spanned centuries. Both nations, the ministry statement added, were "perfectly capable of managing all aspects of their relationship with the appropriate degree of care and attention."

A visit to Pakistan and India by Iranian President Mahmoud Ahmadinejad in April put the IPI back in the spotlight after a several-months hiatus. Following the brief visit to Islamabad, Iranian and Pakistani officials said that the two sides had reached agreement on outstanding issues concerning the pipeline, but the Iranian president's visit to India was greeted with much greater fanfare.

After talks with Iran, Indian officials agreed to resume attending trilateral meetings on the pipeline. India had stopped attending the meetings last year after pipeline talks had broken down over transit fee issues between India and Pakistan.

And now all the three countries have high hopes for the immediate implementation of the IPI project (or the Peace Pipeline as it is called sometimes).

Meanwhile, the United States is backing an alternative pipeline route that would supply India with natural gas, but not from Iran. A framework agreement has been signed by Turkmenistan, Afghanistan, Pakistan and India for development of the TAPI (an acronym for the countries involved) pipeline with the financial backing of the Asian Development Bank.

Yet the TAPI pipeline proposal has several hurdles of its own to overcome, including the fact that the route traverses through unstable Afghanistan and that there are questions about available natural gas reserves in Turkmenistan.

Furthermore, while the United States may see an Indian commitment to TAPI as a victory over the Iran pipeline proposal, New Delhi does not see the TAPI and IPI pipeline projects as mutually exclusive options.

Royal Dutch Shell and Repsol pulling out of the substantial South Pars natural gas project was probably a source of joy and happiness for Washington, but given the energy appetites of Asia's developing economies, Iran has other options with energy firms and national governments to its east. This was evident from rumors circulating after the Shell-Repsol decision that Chinese and Indian energy interests might step in. Even Russia's natural gas giant, Gazprom, was mooted as a possible participant and a delegation from the Russian oil giant is about to pay a visit to Tehran in the next few days in the same regard.

Energy-hungry powers in Asia, such as India, have decided to leave Washington alone and pursue their energy diplomacy with Iran. As such, Iran will increasingly look to its east to get around efforts by the United States and its European allies to keep Iranian oil and gas beneath the ground.

... Payvand News - 06/06/08 ... --

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