Natural Gas Exports and New Opportunities in the Region

Monday, April 21, 2014

The Russian Federation is currently the biggest supplier of natural gas to the European countries and a large part of the natural gas exported by Russia reaches Europe via pipelines that cross the territory of Ukraine. However, the ongoing tensions between Russia and Ukraine have cast serious doubts over the future outlook of gas supply to Europe. Although the European countries are willing to adopt a strong position on Russia over the crisis in Ukraine, those countries, however, are heavily dependent on the Russian gas. As a result, they are facing serious restrictions in their interaction with Russia. For many long years, the European countries have had serious concern about supply of their natural gas and have made efforts at various junctures to change the current situation. Such efforts have become more complicated recently and have come to loggerheads with the political interests of certain countries which are transit routes for natural gas pipelines. These pipelines carry the natural gas that is produced in the Middle East and the Caspian Sea region to European gas markets and, therefore, are considered to be of transregional importance. Of course, the ongoing crisis between Russia and Ukraine can serve as a wakeup call and prompt all involved parties to find a political solution to this crisis after which the way would be paved for the implementation of new energy projects aimed at diversification of natural gas suppliers for Europe. Under these conditions, the Islamic Republic of Iran has been offered with a good opportunity to emerge as a new supplier of natural gas to Europe. As a result, Iran must be quite ready to take the best advantage of the historical opportunities that will be naturally created by the current political crisis between Russia and Ukraine.

In the meantime, Turkey and the Republic of Azerbaijan are playing a very important role as the main countries that sway control over Trans-Anatolian gas pipeline (TANAP). In fact, in order to become a major supplier of natural gas to the Western Europe in the near future, we must engage in close cooperation with Turkey and the Republic of Azerbaijan. After international sanctions against Iran are removed, such cooperation would enable us to connect the existing Iran-Turkey gas pipeline to Trans-Anatolian gas pipeline. Of course, it should be noted that the future outlook for Nabucco pipeline project will also play a very important role in this regard. This pipeline is planned to reach the eastern part of Austria in order to provide a new route for the transfer of the natural gas needed by the European countries. Political tension and steep rise in construction costs have currently brought this project to standstill. However, it should be noted that the European countries are feeling increasingly concerned about their heavy dependence on the natural gas coming from Russia and this issue may galvanize them into action in order to seriously follow up on the implementation of the Nabucco pipeline project. If this project is carried out rapidly, it would be possible to commission the pipeline over a period of 2-3 years. The construction of Nabucco pipeline will provide a major route for the supply of the natural gas produced by the Republic of Azerbaijan to Europe. Under these conditions, it would be possible for the Islamic Republic to use the existing Iran-Turkey gas pipeline and fill part of the void that has been created in the European gas market. It should be noted that the pipeline that takes Iran's gas to Turkey is currently active and it is possible for the Iranian side to further increase the capacity of the pipeline in view of its technical abilities. The key point here is that the European gas consumers should be convinced to look upon Iran and the Republic of Azerbaijan as reliable suppliers of natural gas.

The main question, however, is what we should do to increase the chances for achieving this goal and realization of this scenario? Various factors should be taken into consideration in this regard, but first of all, Iran's nuclear case should be concluded to a final solution. In order to continue cooperation with the European countries, those countries should be convinced to consider us as a reliable and stable trade partner. In the meantime, we must note that the Republic of Azerbaijan is the most important player which can supply a large quantity of our natural gas to the European markets over the short term. As a result, we must currently focus on increasing our country’s interaction with the Republic of Azerbaijan. It goes without saying that reaching agreements with this country in this regard will be beneficial to both sides.

The Republic of Azerbaijan is planning to develop the third trans-Caspian pipeline. Using this pipeline, Baku will be able to extend Trans-Anatolian gas pipeline up to the gas fields in Turkmenistan. Both Iran and Russia have already announced their opposition to the implementation of this project. However, considering the existing capacities and potentials for interaction between Iran and the Republic of Azerbaijan, Iran must strike a deal with officials in Baku over this project. In doing so, the Islamic Republic must offer support for this project while asking the Republic of Azerbaijan to support the transfer of the Iranian gas to Europe through Trans-Anatolian gas pipeline. Such a deal will be very beneficial to our country and even if these efforts fail to achieve the final goal, Iran would have lost nothing. Of course, it is not clear whether Russia will agree to further development of over trans-Caspian pipeline. Even if Moscow showed the green light to this project, it would perhaps take years before this project is made operational. During this period, Iran would be able to export a large amount of gas to Europe. At the same time, Iran would be able to facilitate transfer of Turkmenistan’s gas to trans-Anatolian pipeline via the southern coasts of the Caspian Sea.

On the other hand, Iran's cooperation with the Republic of Azerbaijan can evolve into new dimensions over the long term as Azerbaijan can help Iran with the implementation of a pipeline project, which is supposed to take natural gas from Iran to Iraq and Syria. This project has been currently stalled by many technical challenges and Azerbaijan's assistance in this regard will be of high value to Iran. This country has good experience in developing multinational gas pipeline projects. At the same time, it has access to modern technologies through its partners and those technologies can be very useful for the development of the gas pipeline which will run from Iran to Iraq and Syria.

Key Words: Natural Gas Exports, New Regional Opportunities, Ukraine, Russia, Europe, Caspian Sea Region, Republic of Azerbaijan, Iran

Source: Taajeraan Website
Translated By: Iran Review.Org