In recent months, Iranian officials have been signaling to potential customers in Europe, potential suppliers in the Caspian Sea Basin, and transit country Turkey that without Iranian participation the European Union's Southern Gas Corridor will take many years to realize, or might never be realized.
The Southern Gas Corridor is all about decreasing Russian gas exports to Europe, an increasingly important issue for European governments as ties with the Kremlin continue to deteriorate over events in Ukraine, according to OilPrice.com.
A quick look at a map shows why Iran, with the largest gas reserves in the world, is well-placed to sell gas to Europe and also link gas-rich countries in the Caspian Basin region to Europe. International sanctions imposed on Iran over the country's nuclear energy program have restricted Iran's ability to sell its oil and gas in world markets or to participate in multinational pipeline projects.
The latest round of talks between Iran and the world powers (UN permanent Security Council members Britain, China, France, Russia, and the United States, plus Germany) seem to have already convinced all parties that the time is approaching when sanctions will ease sufficiently and Iranian gas and oil will be available to world markets.
Iran has been dropping hints about its readiness to enter the EU's planned gas corridor for many months. But in August Tehran sent a message straight to the heart of Europe when a top official spoke of resurrecting the Nabucco gas-pipeline project. Former deputy oil minister, Ali Majedi, announced that his country was ready to supply gas to Europe through Nabucco.
The Nabucco project was shelved after Azerbaijan chose in June 2013 to ship its gas via the Trans-Adriatic Pipeline (TAP). Nabucco was aimed at bringing some 31 billion cubic meters (bcm) of gas to Baumgarten, Austria, (and was included as part of the Southern Gas Corridor) but faced problems convincing potential suppliers to sign contracts. Majedi stated that Iran was prepared to sign on as a supplier and added that "two visiting European delegations" had discussed potential routes to bring Iranian gas to Europe. He said the country that was closest to signing a deal with Nabucco -- that is, Azerbaijan -- has insufficient reserves of gas to fill the pipeline.
Tehran's Proposal
At the start of February, Azizollah Ramezani, the director of National Iranian Gas Company's department for international relations, said European countries would not import Iranian gas for "political reasons." So he offered an alternative.
"Our proposal -- is getting Turkmen and Azeri gas to Iran, and then its transit to Europe via Turkey, because this route is the most economical way to transfer gas to Europe," Ramezani explained. The original Nabucco project also envisaged a pipeline running from the Georgian and/or Iranian border, through Turkey and into Europe. Iran already has a pipeline to Turkey that supplies some 10 bcm annually. Russia supplied Europe with some 155 bcm of gas in 2014.
For the Southern Gas Corridor to seriously affect Europe's Russian gas imports would require the construction of multiple pipelines from the Caspian Basin and Iran.
Iran, according to the BP Statistical Review of World Energy June 2014, has some 33.8 trillion cubic meters of gas, while Turkmenistan has the world's fourth-largest reserves with some 17.5 trillion cubic meters.
European countries also know that they may face more problems regarding possible cuts in their natural gas supplies as Tehran is considering using its own leverage options.
A lawmaker said on Wednesday that the parliament will soon start drafting a law to impose natural gas sanctions against Europe in response to the continuation of sanctions against Iran. Abdolvahid Fayyazi said that Tehran is now considered as a potential major gas supplier to the European Union given the halt to Russia’s gas exports to Europe.
“Iran can use the powerful leverage of gas if they [EU] sanctions remain in place or are intensified," Fayyazi was quoted by Tasnim news agency as saying.
