Iran News ...


11/23/09

Iran and Nabucco

By Bahman Aghai Diba,  PhD International Law of the Sea

The Nabucco pipeline is a planned natural gas pipeline from Caspian and the Middle East region to Turkey and finally to Austria.  The aim of this pipeline is diversifying the current natural gas suppliers and delivery routes for Europe. The project is backed by several European states and the United States.  


Nabucco gas pipeline

The main source of Nabucco's supply will be the second stage of the Shah Deniz gas field in Azerbaijan, coming on-stream in 2013. Turkmenistan would provide for Nabucco 10 bcm of gas annually. The natural gas could be transported through Iran. In the long term, Kazakhstan may become a supplier providing natural gas from the Northern Caspian reserves through planned Trans-Caspian Gas Pipeline. Egypt could provide 3-5 bcm of natural gas through the Arab Gas Pipeline. Also Iraqi gas would be imported via the Arab Gas Pipeline from the Ekas field. Iran has also proposed to supply gas to Nabucco pipeline and this was backed by Turkey; however, due the political conditions this is rejected by the EU and the United States. (Condensed from: http://en.wikipedia.org/wiki/Nabucco_pipeline)

The agreement for construction of Nabucco gas pipeline from the Caspian Sea and the Middle East to Western Europe was concluded in July 2009 in Turkey.  It will be 3300 Kilometers long and it will replace part of the Russian supplies to the EU countries. It is supposed to be ready in 2014.  However, it is not very clear which countries will provide the needed gas for the Nabucco.

Iran's participation is questionable because of its ongoing conflict with Washington. United States Special Envoy Richard Morningstar has said:

"I don't think there would be an agreement at this point among the Nabucco consortium for Iranian participation at this time...Our European allies, I think, are in sync with this position...This would be the absolute worst time to encourage Iran to participate in a project in Nabucco when we've received absolutely nothing in return".

Meanwhile, Nabucco Managing Director Reinhard Mitschek appears to be leaving the door open to Iran's participation. Here's what he has recently said:

"Nabucco has never excluded any source. Nabucco is not excluding any source. Bottom line, we have to buy the gas. The national gas companies will evaluate the political aspect, the commercial aspect, the technical aspect and then they will decide to buy gas from Azerbaijan, Turkmenistan, Iraq, Iran and Russia. For all these sources, we are open to transport the gas".

It will probably be years before we know whether Nabucco will buy Russian or Iranian gas, but all of this highlights the long-term energy competition looming between Russia and Iran and its implications for America's effort to secure Russian cooperation on the Iranian nuclear issue. (www.thewashingtonnote.com)

The EU's long-delayed Nabucco pipeline has received an important boost with the signing of an inter-governmental transit agreement between Turkey, Bulgaria, Romania, Hungary and Austria. With Russia's rival South Stream project having already secured the support of Italy, Serbia, Bulgaria and Greece, the Balkans is gradually becoming a tale of two pipelines. The outcome of these respective projects, therefore, will have far-reaching implications not only for Europe's long-term energy security, but for the strategic balance of the Balkans and the pressures facing the EU's enlargement agenda. (http://www.guardian.co.uk)
 


Map of the proposed South Stream natural gas transportation pipeline
author: Samuel Bailey
 

In 2006, Gazprom of Russia proposed an alternative project, in competition with the Nabucco Pipeline, that would involve constructing a second section of the Blue Stream pipeline beneath the Black Sea to Turkey, and extending this up through Bulgaria, Serbia and Croatia to western Hungary. In 2007, the South Stream project through Bulgaria, Serbia and Hungary to Austria, or alternatively through Slovenia to Italy, was proposed. It is seen as a rival to the Nabucco pipeline. Ukraine has proposed the White Stream pipeline, connecting Georgia to the Ukrainian gas transport network. ( http://en.wikipedia.org/wiki/Nabucco_pipeline )

 

Iran, while holding the second largest natural gas reserves in the world, is not a major exporter of the commodity. The EU seeks a lowering of its dependence on Russian energy, and Iran potentially could benefit by joining projects like the Nabucco gas pipeline.

Iran's isolation and its poor relations with the international community are impediments that stand in the way. Iran's most important single source of natural gas is the South Pars field in the Persian Gulf, which it holds in common with Qatar. The fact that a tiny emirate across the Persian Gulf has been exploiting the gas from the Qatari side of the South Pars to the tune of billions of dollars, while Iranians helplessly witness the depletion of the reserves has caused the Iranian government a major embarrassment in the eyes of the people (Qatar enjoys the highest per capita income in the region).

Iranian politicians have claimed many times that Iran's international isolation and the economic sanctions-including those imposed by the UN Security Council-have not hurt the country seriously, and they insist on continuing the nuclear program at all costs. In reality, however, Iran's oil and gas industry (the country's main source of income) have suffered and will suffer further if no compromise is made.

The projected construction of oil and gas pipelines over the next 25 to 50 years all bypass Iranian territory and Iran will lose the transit fees, jobs, investment and prestige that accompany such projects.

The United States supports Nabucco as a means of avoiding Russian monopoly in the European gas-supply chain, and has backed the participation of Azerbaijan, Kazakhstan, and especially Turkmenistan in the project.

Brussels and Washington are also supporting the construction of a Trans-Caspian, natural-gas pipeline to run from either Kazakhstan, or more likely from Turkmenistan, along the seabed to Azerbaijan, where the gas would be pumped into pipelines leading to Nabucco. But the Russians and Iran are opposing it under the pretext of the protection of the Caspian Sea environment.

Although, in June 3 2008, U.S. Deputy Assistant Secretary of State Matthew Bryza told RFE/RL's Azerbaijani Service that while the United States backs a larger effort, including the possible export of Iraqi gas through Nabucco, it does not back the inclusion of Iran in the pipeline plans, it seems that the US and the EU are ready to accept Iran in the Nubucco, if Iran enters into some kind of compromise with the West on its nuclear question.  This may be a major source to pressure the president of Iran, who has been criticized during the recent elections for his economic policies.


(http://www.nabucco-pipeline.com/)


Conclusions:

1-    Nabucco has become close to reality by the signing of the agreement in Turkey in July 2009.

2-    The issue of suppliers is open to discussion yet and in fact until the pipeline is ready (it will take a few years), the issue may face a different situation.

3-    Russian participation is not welcomed because it beats the purpose of construction of Nabucco(which is mainly to avoid the monopoly of the Russians).

4-    Iran is able and willing to participate.  The EU and Turkey hope it becomes possible.  However the participation of Iran has more political side than economic side (this can be compared to the Baku Jayhan Oil Pipeline which avoided Iranian territory due to political reasons).  Iran has not yet lost the opportunity, but if it does not come to a kind of compromise on its nuclear program with the West, it will definitely lose the opportunity.   

 

About the author: Bahman Aghai Diba is a senior consultant to the World Resources Company in the Washington DC area

... Payvand News - 11/23/09 ... --



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