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EUROPE'S EFFORTS TO BUY IRAN'S GAS: MANY HIGH RANKING FINANCIAL AND POLITICAL DELEGATIONS ARE ON THEIR WAY TO TEHRAN FOR TALKS
Jam-e Jam Newspaper
Sept 8 2008
Iran
It appears that the confrontation in Abkhazia and South Ossetia between
the West and Russia is providing a timely economic opportunity for
Iran's economic, energy and gas exports. According to our reporter,
following the relatively widespread political disagreements which have
occurred between the West and Russia over Georgia, and the ensuing
consequences, the West is now worried that Russia will take retributive
measures in the field of energy and gas exports, an area which is
the Achilles' heel of a large number of western European states.
This is particularly pertinent as winter comes close. The end of
September is the time of review of the costs and conditions for gas
sales to needy customers. Europe's important countries such as France,
Hungary, Austria, Slovakia, Germany and Poland, have, over the past
two and a half years, become all too familiar with the short history
of Russia's behaviour and this country's inclination to play the
powerful oil and gas card. They have tasted its bitter reality and so
take the issue of diversifying oil and gas sources much more seriously.
Europe has a number of options to choose from in its quest to diversify
its energy sources. Considering the relatively rich supplies of oil
and gas they have, Turkmenistan, the countries surrounding the Caspian
Sea and the countries in the North African continent are suitable
options. However, it can be said that the most important country
for Europe when it comes to diversifying its oil and gas sources,
one which is its first choice and dependable in all aspects, is
Iran. After Russia, Iran has the second-largest natural gas reserves
in the world, and in this respect it stands head and shoulders above
its rivals. Consequently, over the last few days, the European Union
has begun noticeable political efforts to establish political and
diplomatic contacts with Tehran. It hopes that through two methods of
negotiating over new projects for the construction of a pipeline and
activating the potentials of previous agreements, it can confront the
challenge of a possible shortage of gas supplies caused by Russia,
even though this is a long-term prospect. According to diplomatic
sources in Tehran, the European Union's main priority is to use the
potentials of the previous agreements which, due to political reasons,
were put on the back burner such that the agreements were signed but
they never reached the implementation stage.
Europe's cold memories of Russia
Over the past year, and until the final weeks of 2007, the inhabitants
of Western Europe were concerned about their supply of gas from
Russia. They have cold memories in this regard. The most famous of
these memories is the speech given by Vladimir Putin, the former
Russian president, on 31st December 2005 in which he gave [asked]
Ukraine, which is seen as one of the closest allies of the West in
the territory of the former Soviet Union, until the 1st January 2006
to either accept the new price announced by this country for gas or
face its gas supply being cut off.
In his orders to Medvedev, the current president of Russia, who at
that time was the chairman of Gazprom, the price of gas for Ukraine
rose from 50 dollars per thousand cubic metres to 230 dollars. Under
such conditions, the pro-western president of Ukraine refused to agree
to the proposal, so the Russians cut off the supply of gas to this
country. As a natural consequence of this, gas supplies for Europe
which transited Ukrainian soil were also reduced by 50 per cent, and
a large part of Europe in extremely cold temperatures faced either
reduced gas supplies or none at all. And this is not the only bad
memory the Europeans have of Russian gas [supplies]. In 2006 too,
only a few hours after Medvedev's victory, Gazprom called on Ukraine
to pay the 1.5 bn dollars it owed it for gas supplies. This created
another challenge to the supply of gas to Europe, though it was not
as serious as the previous one.
In addition to Ukraine, Russia has also exerted pressure on other
countries which transit gas and oil to Western Europe, amongst these
are Georgia and Armenia. For example, in the month of Aban 1385
[November 2006], it increased the price of gas exported to Armenia
from 110 dollars per 1000 cubic metres to 230 dollars, more than
doubling the cost.
The culmination of these events has brought Europe to the conclusion
that over-dependence on the supply of energy from Russia will create
a serious challenge for this continent, one which has to be resolved,
and energy must be obtained from a variety of sources not through
reliance on one source alone. The recent military conflict in the
separatist regions of Abkhazia and South Ossetia and the worry about
a delayed reaction from Russia as winter approaches have once again
proved the correctness of this view. Therefore the situation is that
the diplomats are packing their suitcases and heading off for Tehran.
Delegations on way to Tehran
Our reporter has obtained information that a number of high-ranking
political and economic delegations are on their way to Tehran to hold
talks on activating previous projects for the export of Iran's gas to
Europe. The first and largest of these teams, headed by the European
Union energy commissioner, will arrive in Tehran within next two
weeks. This trip has two aims, the first is to revive the agreement
signed between Iran and Turkey in Tir 86 [July 2007] for the export
of Iranian gas to Europe across this country's land, and the second
is to hold talks over the planning and inauguration of new pipeline
projects with Iran.
Kazem Vaziri Hamaneh, Iran's former oil minister, and Hilmi Guller,
Turkey's energy minister, signed an agreement on 23 Tir 86 [13 July
2007] according to which Turkey would allow the construction of a
pipeline and the transit of Iran's gas to Europe across its land,
in exchange for its participation in the development of the South
Pars gas field. Up to now, however, this matter has remained at the
stage of agreement [as received].
Jam-e Jam Newspaper
Sept 8 2008
Iran
It appears that the confrontation in Abkhazia and South Ossetia between
the West and Russia is providing a timely economic opportunity for
Iran's economic, energy and gas exports. According to our reporter,
following the relatively widespread political disagreements which have
occurred between the West and Russia over Georgia, and the ensuing
consequences, the West is now worried that Russia will take retributive
measures in the field of energy and gas exports, an area which is
the Achilles' heel of a large number of western European states.
This is particularly pertinent as winter comes close. The end of
September is the time of review of the costs and conditions for gas
sales to needy customers. Europe's important countries such as France,
Hungary, Austria, Slovakia, Germany and Poland, have, over the past
two and a half years, become all too familiar with the short history
of Russia's behaviour and this country's inclination to play the
powerful oil and gas card. They have tasted its bitter reality and so
take the issue of diversifying oil and gas sources much more seriously.
Europe has a number of options to choose from in its quest to diversify
its energy sources. Considering the relatively rich supplies of oil
and gas they have, Turkmenistan, the countries surrounding the Caspian
Sea and the countries in the North African continent are suitable
options. However, it can be said that the most important country
for Europe when it comes to diversifying its oil and gas sources,
one which is its first choice and dependable in all aspects, is
Iran. After Russia, Iran has the second-largest natural gas reserves
in the world, and in this respect it stands head and shoulders above
its rivals. Consequently, over the last few days, the European Union
has begun noticeable political efforts to establish political and
diplomatic contacts with Tehran. It hopes that through two methods of
negotiating over new projects for the construction of a pipeline and
activating the potentials of previous agreements, it can confront the
challenge of a possible shortage of gas supplies caused by Russia,
even though this is a long-term prospect. According to diplomatic
sources in Tehran, the European Union's main priority is to use the
potentials of the previous agreements which, due to political reasons,
were put on the back burner such that the agreements were signed but
they never reached the implementation stage.
Europe's cold memories of Russia
Over the past year, and until the final weeks of 2007, the inhabitants
of Western Europe were concerned about their supply of gas from
Russia. They have cold memories in this regard. The most famous of
these memories is the speech given by Vladimir Putin, the former
Russian president, on 31st December 2005 in which he gave [asked]
Ukraine, which is seen as one of the closest allies of the West in
the territory of the former Soviet Union, until the 1st January 2006
to either accept the new price announced by this country for gas or
face its gas supply being cut off.
In his orders to Medvedev, the current president of Russia, who at
that time was the chairman of Gazprom, the price of gas for Ukraine
rose from 50 dollars per thousand cubic metres to 230 dollars. Under
such conditions, the pro-western president of Ukraine refused to agree
to the proposal, so the Russians cut off the supply of gas to this
country. As a natural consequence of this, gas supplies for Europe
which transited Ukrainian soil were also reduced by 50 per cent, and
a large part of Europe in extremely cold temperatures faced either
reduced gas supplies or none at all. And this is not the only bad
memory the Europeans have of Russian gas [supplies]. In 2006 too,
only a few hours after Medvedev's victory, Gazprom called on Ukraine
to pay the 1.5 bn dollars it owed it for gas supplies. This created
another challenge to the supply of gas to Europe, though it was not
as serious as the previous one.
In addition to Ukraine, Russia has also exerted pressure on other
countries which transit gas and oil to Western Europe, amongst these
are Georgia and Armenia. For example, in the month of Aban 1385
[November 2006], it increased the price of gas exported to Armenia
from 110 dollars per 1000 cubic metres to 230 dollars, more than
doubling the cost.
The culmination of these events has brought Europe to the conclusion
that over-dependence on the supply of energy from Russia will create
a serious challenge for this continent, one which has to be resolved,
and energy must be obtained from a variety of sources not through
reliance on one source alone. The recent military conflict in the
separatist regions of Abkhazia and South Ossetia and the worry about
a delayed reaction from Russia as winter approaches have once again
proved the correctness of this view. Therefore the situation is that
the diplomats are packing their suitcases and heading off for Tehran.
Delegations on way to Tehran
Our reporter has obtained information that a number of high-ranking
political and economic delegations are on their way to Tehran to hold
talks on activating previous projects for the export of Iran's gas to
Europe. The first and largest of these teams, headed by the European
Union energy commissioner, will arrive in Tehran within next two
weeks. This trip has two aims, the first is to revive the agreement
signed between Iran and Turkey in Tir 86 [July 2007] for the export
of Iranian gas to Europe across this country's land, and the second
is to hold talks over the planning and inauguration of new pipeline
projects with Iran.
Kazem Vaziri Hamaneh, Iran's former oil minister, and Hilmi Guller,
Turkey's energy minister, signed an agreement on 23 Tir 86 [13 July
2007] according to which Turkey would allow the construction of a
pipeline and the transit of Iran's gas to Europe across its land,
in exchange for its participation in the development of the South
Pars gas field. Up to now, however, this matter has remained at the
stage of agreement [as received].