ATHENS – The deal Iran reached with world powers over its nuclear programme, which was approved by the Iranian parliament on October 13, is very promising for the European market and the Caspian region.
“Iranians are interested in feeding the European market more for strategic reasons but as far as economic reasons are concerned they are more directed to the Asian market,” Constantinos Filis, director of research at Institute of International Relations, told New Europe on October 13.
Speaking on the sidelines of a conference on Investing in Energy in Athens, Filis said that in the coming two decades Iran couldn’t deliver more than 30 to 40 or maximum 50 billion cubic metres (bcm) of natural gas to Europe.
Chris Weafer, a senior partner at Moscow’s Macro Advisory, wrote in an e-mailed note to investors on October 13 that Iranian gas exports are a long way off. “Iran’s gas reserves are almost equal in size to those of Russia but it seems likely it will be a decade before the country can export any meaningful volumes,” Weafer wrote.
The Caspian Corridor is expected to play a major role in the re-emergence of Iran, and especially as it rebuilds trade links with Europe and Asia, Weafer said, adding that Azerbaijan is ideally placed to benefit from Iran’s comeback, while Turkmenistan will be a major energy supplier.
However, Weafer noted that plans to build a Trans-Caspian gas pipeline are even less likely. “It is most unlikely that Turkmenistan will be able to build a trans-Caspian gas pipeline, to supply the EU, because it will not oppose objections from Iran and Russia,” he said.
Filis argued that it is unlikely that the Tran-Caspian pipeline will be materialised given that the legal status of the Caspian has not yet been defined. “It is mainly Russia and Iran ‘to blame’ for what’s happening with the Trans Caspian because they do not want for Turkmenistan to get a link to Europe through Azerbaijan. At the same time speaking about Baku, it is not only that they do not want to disappoint or to harm Russian interests. The other reason they don’t want the Trans Caspian to be materialised is the fact that they want to have kind of a monopoly for the Azeri gas to feed the European market rather than share this with the Turkmens,” Filis told New Europe in Athens.
Azerbaijan and Turkmenistan have ambitious plans to expand gas output. Azerbaijan plans to export 10 billion cubic metres of gas to Europe via the Trans Anatolian Pipeline (TANAP) and the Tran Adriatic Pipeline (TAP). US-backed Interconnector-Greece-Bulgaria (IGB) will connect with TAP, with the prospect of additional interconnecting pipelines up to Romania and Hungary, and possibly all the way north to the Baltic countries.
However, Azerbaijan’s capacity to significantly increase export to Europe is limited, Filis said. “Overall, I think that Azerbaijan will transport its gas to Europe but not in quantities that will have a dramatic change in the European market,” he said. “As far as Turkmenistan is concerned I think they are also very much directed to the Asian market,” he added.
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