Will Armenia Become the Gatekeeper of Iranian Gaz to Europe?

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Will Armenia Become the Gatekeeper of Iranian Gaz to Europe?

azernews.az

Written by Aleksandr Shustov; Originally appeared at Eurasia.expert, translated by AlexD exclusively for SouthFront

Iran has been eyeing Armenia for more than a year as a bridgehead for the export of its gas to Europe. Yerevan is interested as well in taking part in large-scale economic projects. Russia relies on the construction of the gas pipeline “Turkish Stream”. Considering that all gas networks in Armenia belong to Gazprom, and the infrastructure for the transit of large volumes of Iranian gas in the country are missing, the prospects of this project are still vague.

Transit Perspectives

On July 31, the President of Armenia Serzh Sargsyan in an interview with the Iranian paper “Sharh” declared that Armenia is studying the question of transit of Iranian gas to Europe. Up to now Iran was for Armenia just one of the suppliers of natural gas, and not the largest, and the prospects of turning this Trans-Caucasian republic into a gas exporting country could bring noticeable geopolitical and economic changes to this part of Eurasia. The transit plans of Yerevan and Tehran affect the interests of several states, such as Georgia, Azerbaijan, Russia, as well as the USA and other countries of Eurasia.

“As for the question of transportation of gas from Iran to Europe, such a large-scale project needs to be thoroughly studies, designed, and if it is economically profitable for all parties then why not,” said S. Sargsyan “The issue is currently at the level of expert discussion. We, in turn, repeatedly stated that we are interested to participate in large economic projects and are ready to cooperate”.

However, in this “gas transport equation” there are still too many unknowns. There are a number of countries not interested in the transit of Iranian gas through Armenia. Russia, for its part, counts on the “Turkish Stream”.

Iran gas can breathe a second life into the Trans-Anatolian gas pipeline project (TANAP), to connect Azerbaijan through Georgia and Turkey with Europe. But TANAP is the main competitor of the Russian “South Stream”, renamed “Turkish” after changing the route.

The EU with the help from TANAP considers lowering its dependence on Gazprom. The emergence in Europe of Iranian gas threatens Russia with falling prices and shrinking market shares.

Iran Gas for Europe

It is not the first time that the Armenian transit possibilities attract the attention of Iran. In June 2015 the Director International Relations of the Iranian national gas company (NIGEC) Azizollah Ramazani said that the Republic is considering as one of the variants of gas supplies to Europe. Among the possible directions for export, he named the routes Iran-Armenia-Georgia-Black Sea, Iran-Turkey, Iran-Azerbaijan-Georgia-Black Sea, Iran-Iraq-Syria-Lebanon.

Total export, according to A. Ramazani, can reach 30 billion cubic metres per year. “Gas” relations between Armenia and Russia, as Iranian Ambassador Mohammad Reisi stated in an interview on the channel “Armenia” in April of the same year on the prospects of transit will not be affected.

In July 2016 the Iranian news agency IRNA informed on the conclusion of a bilateral agreement, providing trial gas shipments from Iran to Georgia through Armenian territory. The Minister of Petroleum of Iran Bijan Zanganeh at the end of the meeting with the Minister of Energy and Natural Resources of Armenia Levon Iolana stated this. For the transit of Iranian gas the government of Armenia established a special company – JSC EnergoImpex. In addition, Armenia, according to B. Zangan, at the end of 2018 would like to increase the current 1 billion cubic metres a day with 3 billion cubic metres of Iranian gas. The Armenian thermal power plants are working on supplying the generated energy back to Iran.

Prospects of the transit of Iranian gas through Armenia into Europe are still extremely vague. The agreement with Georgia is in test mode and the supplied gas is intended for domestic use.

With regard to the possible export of Iranian gas to the sea through Georgia, it can only be by tankers in liquefied form. The necessary infrastructure is non-existent and its construction requires major investments.

In addition, Georgia is under strong control of the US, which, given its relations with Iran, is unlikely to be enthusiastic with the expansion of its export opportunities in the European direction.

Azerbaijan is Opposed

The most realistic option for Iran is the transit through Armenia, the connection to the TANAP gas pipeline. To reach full capacity it needs Iranian gas. But in this case there are two formidable obstacles: the position of Baku, which because of extremely conflicting relations with Yerevan over Nagorno-Karabakh, does not want to see Yerevan in the project, and, again, the lack of the necessary infrastructure. It is noteworthy that immediately after the statement of S. Sargsyan about the possible transit of Iranian gas through Armenia, the Azerbaijani news agency Trend hastened to declare this project unrealistic because of the position of Georgia, Russia and the likelihood of a second wave of sanctions against Iran.

The obstacle is the fact that Armenia lacks the infrastructure for the transit of large volumes of Iranian gas. The capacity of the Armenia-Iran pipeline, commissioned in 2007, is of 2.3 billion cubic metres a year. It is necessary to build a new pipeline, which will require major investments and raises the question of who will invest.

The owner of the Armenia part of the pipeline is Gazprom, which owns all gas networks in Armenia. And Russia does not need a competitor in the form of Iranian gas for the EU markets.

Armenia clearly lacks resources. This leaves Iran, which has yet to negotiate with Georgia, and perhaps also with Azerbaijan and Turkey

For all these reasons, the transit of Iranian gas through Armenia to the EU appears to have little chance of being realised, however the statement about studying this subject is rather a reflection of Tehran and Yerevan’s mutual interest in cooperation of this kind.

Aleksandr Shustov, candidate of historical sciences

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  • Pave Way IV

    Russia has more to gain by helping Iran (or anyone else) develop their petroleum resources than worrying about the potential of competition. It would take a decade or more for Iran to build out so much capacity to Europe for it to have any real effect on Russian sales. Russia is not terrified of competition, which it knows will eventually develop as a normal result of the marketplace. What Gazprom loses, Rosneft and other Russian oil service companies make up for on construction and development projects. It’s only the west and economists that seem to think Russia is single-mindedly obsessed with natural gas production and sales to the exclusion of all other potential economic benefits of the international petroleum industry.

    The goal for the US, Israel and Saudi Arabia has always been the same: EU gas from anywhere EXCEPT Russia and Iran, no matter how much more it will cost Europeans.

    • Marc Fischer

      Well said buddy

  • hhabana

    Moral of story: Russia needs to diversify its income sources.

  • Manuel Flores Escobar

    Russia dont mind Iran or Azerbajan gas supply to EU…Russia only wants all transit through his Pipelines…because in case of war vs NATO…Russia can cut all gas supply to EU!..only through ships( easy target for Russian submarines) or Algeria-Spain pipeline..nothing else!