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Iran and Russia have conflicting Interests in Export of Gas to Europe

By Bahman Aghai Diba, PhD International Law of the Sea

As far as the export of natural gas to Europe is concerned, Iran and Russia are serious rivals. Iran, due to sanctions is not a major exporter of gas at all; however, it has the potential to break the Russian dominance over the gas market in Europe. Flow of the huge gas resources of Iranian gas towards the EU region means the end of Russian domination over the gas market and a serious blow to the capability of Russia for making the European countries tolerate the Russians policies in the region. The growing hostility of the Western countries and Russia, and serious inclination of Russia to keep its monopoly in the European gas market, along with reliance of the Islamic regime in Iran on the Russian support, puts Iranian government in a difficult situation regarding gas exports to Europe.

Some of the officials of the Iranian government have recently shown signs of being interested in supplying gas through the Caspian Sea and other possible routes to the European countries. At the same time, some of the representatives of the Iranian parliament are talking about a bill to ban export of gas to the EU countries, under the pretext that they are implementing the instructions of the Supreme Leader of the Iranian regime about retaliating the European sanctions through imposing sanctions against the EU.

Iran, as a country that has 2nd largest natural gas reserves of the world (after Russia) possesses the potentials to play a serious role in the gas market of the region and the world. For the same reason, the Russians are putting pressure on Iran not to enter this market. Certain hardliner political factions in Iran also are putting pressure on the regime to refrain from creating troubles for the Russians, who have been the ally of the Iranian regime in many cases in the history of the Islamic Republic in Iran.

Worsening of relations between the Western countries and Russia (which coincides with more pressures from the Western countries on Iran to stop or change its nuclear program) has created a new atmosphere of closeness between the Iran and Russia and at the same time, reduced capacity of Iran for following policies that are in favor of the country’s national interests. Therefore, while Iran has a historical chance to make the best use of the EU insistence to get rid of the Russians monopoly on the gas market of the EU, and to enter into arrangements that can channel the tremendous natural gas capacity of Iran to the EU markets, probably in the quickest manner that the latest financing and technology concerns that the world can provide, Iranian people are only witnessing the passing of this rare opportunity due to the sanctions.

The South Pars Gas field is Iran’s most important single source of natural gas in the Persian Gulf, which it holds in common with Qatar. The tiny emirate across the Persian Gulf has been exploiting the gas from South Pars to the tune of billions of dollars; while Iranians helplessly witness the depletion of the reserves (Qatar enjoys the highest per capita income in the region). The natural slope of this joint field is towards the Qatari side and there is no mechanism to stop them from exploiting Iranian share. Qatar has succeeded to get the US and South Korean technology for LNG and this has created a great favor for it. Even the Russians do not have and are desperately in search of this technology.

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. 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 main source of Nabucco's supply will be the second stage of the Shah Deniz gas field in Azerbaijan. In the long term, Kazakhstan and Turkmenistan may become a supplier providing natural gas from the Caspian reserves through planned Trans-Caspian Gas Pipeline.

The natural gas could be easily and economically transported through Iran. However, 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 EU and the US are also supporting the construction of a Trans-Caspian 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. The Russians are opposed to it because they want the flow of gas to go only though the pipelines under their control. Iran is also opposed to it as a measure of putting pressure on others to accept its approach to the Caspian legal regime. However, both of them claim to oppose it due to protection of the Caspian Sea environment.

Iranian officials have declared that huge new reserves of gas have been discovered in the “Iranian sector” of the Caspian Sea. Iran has announced that the newly found Caspian gas field has at least 50 trillion cubic feet (some 1.4 trillion cubic meters) of gas. Iran’s problem at the moment is not finding oil and gas reserves, especially in the deep parts of the Caspian Sea (the Iranian side of the Caspian Sea is deeper and the deepest point of it is almost 1000 meters deep). What Iran needs is adoption of policies aimed at its national interests, and absorption of necessary investment and technology.

Bahman A Diba, PhD International Law of the Seas, is the author of several books. His latest books were published in 2011:


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