Iran is losing regional and world gas market

TEHRAN, Mar. 09 (MNA) – Touching upon the necessity of Iran’s more active foreign and energy diplomacy to keep and increase its share in regional and world gas market, Omid Shokri believes Iran is even losing Turkey’s gas market.

In near future, gas refineries of phases 13, 22, and 24 of South Pars will be inaugurated officially. This means Iran’s greater share of gas field against its rival Qatar, but situation of Iranian gas exports is not very good. To know more about the issue we reached out to Washington-based Senior Energy Security Analyst Omid Shokri Kalehsar. He is currently serving as a Visiting Research Scholar in the Schar, School of Policy and Government at George Mason University


Why Iran has not been successful in exporting gas despite its success in gas production so that the project of exporting Iranian gas to Pakistan and Oman have not been fruitful after many years?

Exporting natural gas to neighbors is Iran’s priority.  According to strategy of Ministry of Oil, after all phases of South Pars will be online, Iran would be able to exports about 200 mcm natural gas to neighbors.  Iran has some natural gas projects. Iran-Pakistan pipeline will be one of Iran natural gas projects.  Iran completed required infrastructure by 2014 to deliver natural gas to Iran-Pakistan border. But Pakistan due to financial problems and capabilities did not build pipeline to Iran-Pakistan border. Saudi is trying play important energy diplomacy in Pakistan.  And during Bin Salman’s visit to Pakistan they signed some agreements in energy sector and it seems that it will not be easy for Iran to export natural gas to Pakistan in short-term.

Iran has also planned to deliver natural gas to Oman by 2020, but by March 2019, there is going to be a major development in Iran-Oman pipeline. According to the agreement Iran must export 1.5 bcm natural gas to Oman. Iran also is interested to use Oman LNG facilities to produce LNG and export LNG. By October 2018, Oman Ministry of Oil set a tender to choose a company for construction pipeline in Oman territory.

Only %20 of Iran’s gas export pipeline capacity to Basra, Iraq is active. Why Iran has not been able to utilize the full capacity of the pipeline?

The major problem is due to sanctions. Iraq can’t pay for natural gas which imported from Iran. I think there is no major problem in natural gas production. During Summer Iran export more natural gas rather than Winter. During winter domestic consumption is high and Ministry of Oil has to transit more natural gas to domestic pipeline network.  It can be expected by coming months’ capacity of natural gas export to Iraq to be increased. Domestic consumption in Iran is too high. Iran needs to use energy efficiency in all sectors to increase domestic consumption. At present majority of natural gas agreements are long term (20 or 25 years) and it is not clear why Iran-Iraq natural gas pipeline period is just for six year. It possible for Iran to get oil and gas debt with Iraq currency Dinar.

Only 5 to 6 years remain to termination of the contract for the sale of Iranian gas to Turkey and Iraq, and on the other hand, Iran has not been able to find new markets for its gas. What should Iran do for exporting regarding to the increase of gas production?

Exporting natural gas to EU market is Iran second priority.  Natural gas export to Europe requires a much longer pipeline than the Persian Gulf states. As you know, the only logical route to export gas from Iran to Europe is Turkey, although in the past, several transit routes were considered, including Iraq, Syria, the Islamic pipeline, Armenia and Georgia, but at present, Turkey is the right option for Iran to export gas exports to Europe.

The pipeline needed to transport gas from Assalouyeh to the Turkish border is about 2,000 kilometers. Exporting gas from Turkey to the first European country also requires at least another 2,000 kilometers of pipeline, which is much longer than the 200-kilometer pipeline to the Persian Gulf states. Turkey, on the other hand, is not willing to transit Iran’s gas because of its adoptive policies. It wants to be the gas hub itself, the recipient and distributor of gas, which is by no means accepted by Iran. In addition to the logistical and geopolitical issues associated with Iran’s gas exports to Europe, there is also a price dispute.

During past year Iran and Turkey hold a round of negotiations to extend Iran-Turkey natural gas pipeline period. But there is no major progress in negotiations. Iran asked Turkey to import more natural gas and Turkey asked Iran to give more discount in natural gas price. Turkey is importing natural gas from TANAP project from Azerbaijan and by 2019 and Turkey will begin to import more natural gas from Russia via Turk Stream project. Turkey also increase LNG import from Qatar and doubled importing LNG from US. Turkey also made huge investment in renewable energy. It means that Iran natural gas in Turkey energy market is losing its importance. Iran needs more active foreign policy and energy diplomacy to keep its share in regional market and also increase its share.

What will be the possible effect of completion of the North Stream II project on the future of Iranian gas exports?

In EU market there is major competition between Russia, Qatar, US and Australia. Russia is using different pricing system and export policy for every country in EU market to keep and increase its share in EU market. US is against EU’s more dependency on Gazprom. Last December US asked EU members to import more LNG from Qatar instead of importing natural gas from Russia. At present Russia has two major projects to deliver natural gas to EU market. Turk Stream and North Stream II. US is against North Stream II.

US due to shale gas revolution is trying to export more natural gas and LNG to neighbors and its allies. Germany needs Russia natural gas and has welcomed North Stream II project. All developments show that Iran will face major challenges to be a key player in natural gas market in both regional and world natural gas markets and also in short term or midterm it will be hard to Iran to be natural gas exporter to EU.

Due to US sanctions no major foreign energy firms are interested to invest in Iran energy sector.  In my opinion the major problem in Iran energy sector is that to attract foreign investment you need a legal framework, an efficient and fast decision process and political stability (especially in the international context). These variables are far from being achieved as we speak,”.

Interview by Payman Yazdani

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US Wants Europe to Use Qatar Gas Instead of Russian Supplies

The US wants European countries to find other gas suppliers to Russia, with resource-rich Qatar as a possible alternative.

Deputy US Energy Secretary Dan Brouillette told Reuters that Washington was in talks with Doha to supply gas to Europe, and particularly countries that are reliant on Russian gas.

Russian gas accounts for around 60 percent of Berlin’s gas imports, with the Nord Stream 2 pipeline set to double Moscow’s export capacity to Germany.
US President Donald Trump has warned Germany that it would be “captive” to Russia if it relied on it as a gas supplier and urged Berlin to halt work on the Nord Stream 2 pipeline.

The move could see German companies face US sanctions.

Brouillette said he has held talks Qatar’s Minister of State for Energy Affairs Saad al-Kaabi about whether Doha could be an alternative gas supplies to Europe.

“We are talking to Minister Kaabi here about other markets, specifically Europe, to the extent that we can talk to the Qataris about supplying European markets with natural gas,” he said in an interview.
“They are very much interested in that and so are we – it’s very connected to deliberations with others we have around Nord Stream 2.”

He added that Qatar could help diversify the gas market in Europe, particularly with Doha’s investments in LNG export facilities.

“It is good for the national security of Europe. Cheap gas comes at a high price of freedom,” said Brouillette.

Last September, Qatar said it would invest $11.6 billion in Germany over the next five years including in a LNG terminal.

Omid Shokri Kalehsar, a Washington-based senior energy security analyst, told The New Arab that Washington has been encouraging European countries to diversify Russian-dominated energy supplies, with Qatar and the US as possible alternative suppliers.

“It is in the US’ interest allow Qatar to export to specific markets,” said Kalehsar, saying Doha’s supplies play a key role in Washington’s strategy of providing balance in the market.

“Increasing LNG supplies is the best way to reduce [Europe’s] dependency on Russian natural gas…. Qatar is a major LNG provider and is trying to increase its share in the market. Russia is trying to keep its monopoly in Europe – with energy – and has used different pricing strategies to do this.”

Russia has sold a stake of its shares in Rosneft to Qatar, as Doha battles a blockade from a Saudi-led coalition.
Turkey is also boosting its relationship with Russia with the construction of the TurkStream pipelines.

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Iran to Export 1mn bdp of Oil Despite US Sanctions

Qatar will withdraw from the Organization of the Petroleum Exporting Countries (OPEC), the Persian Gulf nation’s Energy Minister Saad Sherida al-Kaabi announced.

The decision to quit the bloc of 15 oil-producing countries that account for a significant percentage of the world’s oil production was confirmed by Qatar Petroleum, the state oil company, last Monday.

Following is an interview with Omid Shokri Kalehsar is a Istanbul based Senior Energy Security and Policy Analyst on the issue:

What are the reasons behind Qatar’s decision to withdraw from OPEC? Is it politically and economically right decision?

It seems that Qatar is interested to be more active in LNG market and keeps its place as world’s first LNG producer and exporter. But it is possible for Qatar to export more oil if Qatar withdraw from OPEC. It should be noted that there is a major challenge between Qatar and Saudi Arabia as OPEC major producers and actor. It is possible for Iran’s private sector to buy Iran crude oil from Energy Exchange and sell it to Qatar energy firms and Qatar firms after Qatar withdrawal from OPEC sell it oil to regional and world market.
Is there any relation between Qatar’s decision and the Saudi policy in the organization?

Some analysts believe that Qatar decision to withdraw from OPEC is reaction to Saudi Policy in OPEC. Qatar is against Saudi Policy in the OPEC, Saudi Arabia after Khashoggi was under pressure.  It should be noted that Qatar-Saudi relations faced major challenge after a Saudi-led coalition imposed blockade Qatar.
Any relation between Trump’s anti-OPEC policies and Doha decision?

 Stability in world oil and low price in oil market is in favor of oil consumers and US. US is against any

country or organization which decided to increase oil production or increase oil price. Trump administration can be expected to continue its policy toward OPEC and will ask OPEC member states to produce more oil to keep oil price down.

How do you see the future of the 60 years old organization?

Major OPEC oil producers must solve problems if they want OPEC to be one of the key factor in world oil market. Every country which has more production has a power in OPEC.
Cooperation and coordination between major oil producers and non-major oil producers is required. If OPEC members need to continue their role in world oil market, they require cooperation between themselves. Without cooperation and mutual understanding between all OPEC members, there is no clear future for OPEC and this organization may face serious challenges in the future.

At the present moment which Iran is under US and its regional allies’ pressure such as Saudi Arabia and UAE to cut Iran’s oil export to zero, will Doha withdrawal from OPEC affect the US goals toward Iran?

As I mentioned before in my interviews and papers it is not easy to drop Iran oil export to zero. Iran during sanction era will be able to export average 1000000 bpd and 300000 bpd condensate bpd.  Iran oil export’s drop is in favor of rest major oil exporters and all major exporters are satisfied with new sanctions imposed against Iran oil exports.

How will be possible reaction of Russia and China to Qatar’s withdraw? Will this decision affect China’s One road-One belt project? 

Russia has a plan to be a key player in LNG market. Russia is careful about all major oil and gas producers, Russia wants them to lose their share in world energy market and plans to increase its own share. China as energy costumer has its own strategy toward energy producer countries in the Middle East such as Qatar. China in promotion of its “Going out Strategy” encourages energy companies to invest in Qatar’s energy sector mainly in natural gas fields. Chinese officials have repeatedly stated that China’s common goal from One road One Belt project is to create dialogue, help to bring peace and stability in the Middle East, link East and West Asia and joint development, eliminate obstacles and biases. Arab Countries and Qatar has special position in this project. According to Wang Yi, Foreign Minister of China, Arab countries cooperation in One Road One Belt will bring Peace in the Middle East. China is interested to keep stability in the region to import oil and gas freely from the region. energy security is key factor in China foreign policy. Last September PetroChina inked its biggest Qatar LNG deal as U.S. Trade at Risk and it seems that China will increase its investment in Qatar energy sector to promote Qatari cooperation in One Road One Belt project.

Omid Shokri Kalehsar is a Senior Energy Security and Policy Analyst, Istanbul.

Interview by payman Yazdani

News Code 140293
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Driving Iranian oil export to zero in short term not easy: Energy expert

TEHRAN, Oct. 27 (MNA) –Touching upon the importance of oil market stability for the US, senior energy expert Omid Shokri says it is not easy to drive Iran’s oil export to zero in short term.

Following the brutal killing of Saudi Journalist at the Saudi consulate in Istanbul, There have been lots of tensions between Saudi rulers and their western allies particularly the US.

The US President Donald Trump has had different contradictory and weak stances towards the scandal. Despite threatening serious punishments against killers of the Saudi journalist at the same time Trump calls the Saudi regime as an important ally for confronting Iran.

The issue was discussed with Omid Shokri Kalehsar, a senior senior energy security and policy analyst in Washington.

Referring to the significance of oil market stability he said, “Stability in world oil market is in favor of US. Any increase in oil market directly affect energy security in the US. US planning to drop Iran oil export to zero but in short term it will not be easy to drop Iran oil export. At long term with sufficient oil supply by major oil exporter Iran’s role in world oil market may decrease, Iran needs to keep its share in regional and world oil market. Iran needs to play active energy diplomacy if interested to keep and increase its share in regional and world oil market. It can be seen that Iran’s oil export will decrease more than %50 in contrast to post nuclear agreement.”

Asked about the possible effect of the recent tensions between Riyadh and Washington over the brutal murder of Saudi journalist Jamal Khashoggi at Saudi consulate in Istanbul, Shokri said, “Current political tensions between Iran and Saudi Arabia, gives an opportunity to Saudi Arabia to export more oil to reduce Iran’s share in world market.

Current tension between US and Saudi Arabia, over Khashoggi hold a potential to affect world oil market but stability in oil market is US priority and also US trying to drop Iran oil export to zero. As mentioned before it will be hard to US to drop Iran oil export to zero. I think US and Saudi due to mutual interest are interested to manage any tension with aimed of decreasing Iran’s role in world oil market. Saudi has promised US to buy weapons from US and value of weapon agreements is above $100 billion. This agreement is very important for US economy and creation of job opportunities for US workers.”

Interview by Payman Yazdani

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The fate of Iran’s energy development plans under US pressure

Tehran, Iran, November 18

By Mehdi Sepahvand – Trend:

A recent expression of doubt by Patrick Pouyanné, the chief executive officer of France’s energy giant Total, whether to carry out cooperation with Iran has strengthened worries over the fate of Iran’s energy development projects.


Omid Shokri, a Washington-based energy analyst, told Trend November 18 that “Total or any other oil and gas company is interested to have good relations with US,” adding, it is possible for Total to withdraw from South Pars field.


Total’s chief executive officer last week said under political pressure, his company is liable to leave the $4.8 billion deal with Iran. “If we cannot do that for legal reasons, because of [a] change of [the] regime of sanctions, then we have to revisit it,” he said.


Total last week increased its US presence with the purchase of a portfolio of liquefied natural gas assets from Engie (ENGIY), including the company’s stake in the Cameron LNG project in Louisiana, one of the first new gas export terminals in North America.


Sealed a few months ago, the deal with Total over the development of South Pars gas field used to be vied by Iran as an icebreaker and itself a discouragement for new sanctions on Iran.

However, last month US President Donald Trump unveiled a tough and comprehensive new policy towards Iran. He accused Tehran of violating the 2015 nuclear accord (which had paved the way for removal of sanctions) and announced that he would no longer certify that the lifting of sanctions was in US interests.


Shokri believes that major to-be partners of Iran’s oil and gas companies are waiting for US Congress decision about Iran and nuclear agreement.


This is while Iran used to cherish the nuclear deal as a means to open way for the development of its oil and gas industries, which had been kept outdated by years-long sanctions.

Iran’s economy is heavily oil-dependent. In the early 2010s, sanctions efficiently stifled the country’s oil revenues as its exports dropped from 2.3 mbpd to 1 mbpd.


Iran’s oil, gas, and petrochemical infrastructure are not by far as efficient as they could. Many of the country’s oil fields are in the second half of their lives and need restoration or else they lose profitability.

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What connects Turkey and Iran? – A look from Washington – EXCLUSIVE

Omid Shokri Kaleshar

Senior Energy Security Analyst, Washington, specifically for Eurasia Diary

Yesterday Turkish President Recep Erdogan negotiated on the regional crisis with the Iranian President Hassan Ruhani and, in particular, a referendum on Syria and Iraq with Iranian officials. Turkey suffered more from the Syrian crisis and presented about 3 million Syrian refugees living there. By October 2017, Turkey donated about $ 30 million to Syrian refugees. Iran and Turkey together with Russia have the potential to solve the Syrian problem, but they also need to cooperate with the US on this issue.

The Iranian and Iraqi forces conducted trainings near the border with the autonomous region of Kurdistan in Iraq, especially after tension raised after the referendum on independence. Last week, the head of the Turkish military headquarters, General Hulusi Akar, visited Tehran for talks with the leading military and political figures of Iran, who are expected to deal with border security and the fight against terrorism, along with regional problems.


Turkey and Iran agreed to strengthen military ties after referendum in Iraqi Kurdistan, where more than 90% of population voted for independence. Iran with Iraq and Turkey can expand military cooperation and conduct military exercises near the borders of Iraq in order to effectively counter regional instability.

There is a Kurdish minority lives in both of countries and they want to create a Kurdish state that directly affects national security, and it is expected that they will apply the same policy in this matter. Energy-intensive Turkey imports large volumes of natural gas from Iran. Both countries are seeking to enhance banking and trade ties in order to triple bilateral trade to $ 30 billion a year in the coming years after the lifting of international sanctions against Tehran.

The preferential trade agreement between Turkey and Iran turned out to be a huge disappointment during the first two years, when bilateral trade lagged behind the $ 35 billion target that the deal was supposed to reach. The agreement, which entered into force on January 1, 2015, aimed at reducing tariffs for about 300 products in order to triple the volume of trade. The results, however, were far from ideal, not even reaching one-third of the goal. While the Iranian market caused the appetite of the world’s trading giants, Turkey showed itself in a very favorable position, being the closest neighbor with already existing tariffs. Nevertheless, there were many disappointments. Despite the lifting of sanctions, Turkish-Iranian trade in 2016 was 100 million fewer than in the previous year, which meant the collapse of the preferential trade deal in just two years.


Starting from the first year, the deal resulted in an unexpected result: instead of growth, the volume of trade between the two neighbors declined. Turkish-Iranian trade amounted to 9.76 billion dollars at the end of 2015 dollars. Not only at 25 billion dollars smaller than the target, but also by $ 4 billion below the level of 2014 in the amount of 13.7 billion dollars. In 2016, Turkey’s exports to Iran amounted to 4.97 billion dollars. compared with 3.66 billion dollars. in the previous year, while imports from Iran, including natural gas, amounted to 4.7 billion dollars., compared with 6.1 billion dollars. in 2015.

Turkey had a positive balance of trade with Iran for the first time in 16 years. Even if this is a small surplus (only about $ 270 million), the fact that the balance is changing in favor of Turkey is a noteworthy development, the result of a steady trend over the past four years. Considering the instability in Iraq and the referendum in Iraqi Kurdistan, Iran has the potential to supply oil and gas to Turkey.

Iran and Turkey should prepare a joint plan, which take into account their national interests regard to the regional crisis, especially in Iraq and Syria. Instability in the region does not benefit the regional states, and it should be noted that both countries are neighbors. The regional crisis requires regional cooperation, and also with the main actors in the region, no country in itself has the capacity to address the regional crisis.

In summary, Iran and Turkey have their own interests in the region, and in some circumstances there is a clash of interests, but by 2017, after the Syrian crisis and after the referendum in Iraqi Kurdistan, both countries, cooperating with Iraq on the issue of Iraqi Kurdistan, and with Russia, and with the United States in the Syrian crisis, should play a more active role. Instability and chaos in these regions directly affect the stability and security of Iran and Turkey. Regional cooperation and large entities in the region are needed to solve the regional crisis.

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Steps Ahead: Russia’s Gazprom Outfoots Europe, Mulls LNG Plant in Iran

Russia’s Gazprom is going to sign a contract with the National Iranian Oil Company (NIOC) to build a liquefied gas plant in the Islamic Republic. The facility will use natural gas from Iran’s South Pars and the end product will be exported to India, Cambodia and Laos.

The two sides are likely to finalize the contract at the St. Petersburg International Economic Forumopening today, Iran Daily reported, citing Fars News Agency.
In an interview with Sputnik, independent Iranian energy expert Omid Shokri Kalehsar said that by pitching such a contract to the Iranians, Gazprom had outpaced its European partners as Iran was only panning to hold tenders for the building of LNG-producing mini-plants.

“The ground for the launch of a number of major bilateral projects, including in the energy sector, was prepared when President Hassan Rouhani visited Moscow in March. European and Russian companies waited for the end of the presidential elections in Iran to thrash out a deal, butr Gazprom got ahead of them all negotiating with our Energy Ministry and NIOC the construction of an LNG plant,” Kalehsar told Sputnik Persian.

He added that with a new government now in place in Tehran, Russia was likely to bolster its position in the Iranian gas sector and that the signature of a pertinent agreement would come as a big step forward in this direction.

Southeast Asia tops the list of Iran’s trading partners and liquefied gas could be a welcome addition to the Iranian exports to the region.

“In view of the growing consumption of liquefied natural gas in a populous country like India, the construction of an LNG plant is highly justified and Russian companies could be of great help here. We could start by setting up a joint venture (by Gazprom and NIOC) to build such a plant and could then export compressed gas to Laos, Cambodia and India,” Omid Shokri Kalehsar continued.

Nikolai Kozhanov, an Iranian-affairs expert in St. Petersburg, pointed to the problems with the planned construction of an LNG plant in Iran.

 “I’m skeptical about export-oriented gas projects in Iran, all the more so when we talk about LNG technologies. One problem is that Iran is consuming more natural gas than it produces and I don’t think it will be have enough gas to sell abroad any time soon. Another problem is that the technology of LNG production is still in a development stage in Russia, which cannot buy them abroad due to the sanctions. That’s why I think that Gazprom is either working for the long haul or has a way to acquire the knowhow and equipment from its Western partners,” Kozhanov said.

“I still don’t believe that such a project could be implemented in Iran, at least for now,” he added.

Russia is planning to expand economic cooperation with the Islamic Republic of Iran in the oil and gas industry to ensure sustainable economic development, President Vladimir Putin said after meeting his Iranian counterpart, Hassan Rouhani in Moscow

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Cooperation of Russia, Turkey and Iran ‘Would Help to Resolve Syrian Crisis’

At the meeting on August 9 in St. Petersburg, Russian President Vladimir Putin and Turkish President Recep Tayyip Erdogan will discuss ways to resolve the ongoing Syrian crisis, and focus on Iran’s role in this regard, Virginia-based Iranian political analyst Omid Shokri Kalehsar told Sputnik.

According to Kalehsar, author of The Role of Energy in Iran-Turkey Relations, both leaders will use Erdogan’s visit to Russia as an opportunity to discuss the Syrian problem and ways they can work together to resolve the crisis.

“I think that at tomorrow’s meeting, the Turkish and Russian leaderswill discuss the Syrian topic in detail and use this opportunity to discuss a trilateral cooperation to resolve the crisis. It means that they will also talk about Iran, which plays a crucial role in the Middle East,” the expert said.

Until recently, Turkey was supporting forces opposed to the secular government of Bashar Assad in Syria, while Iran and Russia assisted the Assad administration in its struggle with Islamic fundamentalist extremists, whose objective is to establish a theocracy under Sharia Law. Russian support to Syria ranges from humanitarian aid to joint anti-terrorism military operations involving the Russian Aerospace Forces.

“If Turkey and Russia will be able to reach a common position on Syria at the initial stage and then, at the second stage, reach an agreement on close cooperation with Iran, the joint potential of these three countries in the expedient resolution of the Syrian crisis will increase,” the expert said.

Earlier, Russian officials stated that Moscow hopes for Turkey to assume a more constructive stance on the Syrian crisis at the upcoming meeting.

“Of course, the Syrian crisis will be discussed in great detail, and we hope that the Turkish position will have a more constructive character in the given context,” Russian presidential aide Yuri Ushakov said.

Ankara and Moscow ended seven months of strained relations in late June when Erdogan wrote a letter to Putin, apologizing for the downing of a Russian Su-24 attack aircraft by a Turkish jet in November 2015 over Syria and extending his condolences to the family of the pilot killed in the incident.

“Due to the polar positions of the countries, the crisis lasted for 7 month until finally they came to the decision to normalize relations. Both countries need each other, after all. Russia plays crucial role in the Turkish energy sector. Russia provides 55 percent of the gas for Turkish industry. Turkish companies have been active in the Russian construction sector since the 1980s. They have invested more than 60 billion in the Russian housing construction market. Besides, Russia is a huge market for Turkish textile products and petrochemicals,” the expert said.

Thus, during the upcoming meeting, the countries intend to discuss such subjects as the Syrian crisis, the normalization of Russian-Turkish relations, Ankara’s payment of compensation to the family of the slain Russian pilot, as well as economic cooperation. The parties may also discuss the Turkish Stream project, the implementation of which was suspended because of the crisis in relations between the two countries.

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Supporting TAPI, S Arabia tries to decrease Iran’s regional role: Expert

The long-awaited mega gas pipeline project of Turk­menistan, Afghanis­tan, Pakis­tan and India (TAPI) connecting the energy-rich Central Asian nation with the South Asian countries was inaugurated couple of days ago, with leaders of the four countries attending its groundbreaking ceremony in Serhetabat followed by another in Herat.

Considering the facts on the ground including political differences of the involved countries in the project and also insecurity and instability in the region many experts believe the successful realization of the project will depend on the ability of the project participants to maneuver through among others geopolitical, financial and technical challenges.

To discuss the issue, we reached out to Omid Shokri Kalehsar, Senior Energy Security Analyst in Washington.


Following is the full text of interview with him:


Considering the differences between India and Pakistan and instability and insecurity in Afghanistan and Pakistan, how successful do you see the future of this project?


The 1,814-kilometer gas pipeline will pass through Afghanistan to Pakistan and India. At least 816 kilometers of the pipeline will pass through the territory of Afghanistan. Transport or transit security is an important part of pipeline project beside of security of supply and demand security, financial guarantee and financial sources are another key factors in any pipeline project.


The Turkmen economy has been fueled primarily by natural gas. Turkmenistan holds 32 trillion cubic meters of natural gas, the world’s fourth-largest reserves. With a small domestic market, Turkmenistan has been able to export the majority of what it produces. With regard to increasing energy demand in India, this country needs diversify energy supply, gas resources in Central Asia especially in Turkmenistan would be one of these resources. This project also would be beneficial for both Pakistan as consumer and transit country and for India as importer. There is a political tension in India and Pakistan relations and maybe TAPI would have positive effect of regional cooperation, stability and security. TAPI may be key factor in India- Pakistan relations to decrease tensions and develop bilateral relations. TAPI natural gas pipeline -which aims to connect Central Asian energy to South Asian consumers -each involve a high degree of intra-regional cooperation. Pakistan will gain transit fee from this project and also will consume natural gas imported by it.



How can this project affect the economy and security of the region particularly Afghanistan?


According to contract, Afghanistan will import gas via this project to meet it domestic demand and will gain $400000 to $500000 annually transit fee. This will help Afghanistan to gain more and partly recover its damaged economy. TAPI project will help Afghanistan to be an actor in regional energy market. The pipeline will pass through the provinces of Herat, Farah, Nimroz, Helmand and Kandahar. Taliban control these provinces. In statement which Taliban sent to local media, this group declared that they will not allow any group or state to disrupt this project. As Taliban controls this region, security threats against TAPI project in this part of Afghanistan will decrease and security concern will down.


Why does Saudi Arabia support the project?


These countries hold major oil reserves in the region and are trying to play an important role in OPEC and world energy market as well. Current tensions in bilateral relation forced countries to use any means to decrease counterpart role in regional security stability.  Saudi Arabia has expressed support for the TAPI transnational gas pipeline. Saudi’s financial support for TAPI would help Pakistan not to need Iranian gas. And it means that Iran will lose Pakistan natural gas market if TAPI materialize project. Last decade India was interested to buy Iran natural gas via Peace Pipeline, but due to US pressure this project did not materialize. It seems that when TAPI comes to online, India no more will be interested to Iran natural gas.  Pakistan and Afghanistan are Iran electricity buyer, during inaugural ceremony Pakistan and Turkmenistan agreed to export electricity from Turkmenistan to Pakistan and maybe in near future if this electricity export project materialize, Pakistan decrease electricity volume which imported from Iran.


What are the challenges and opportunities of the project for Iran?


Iran has plans to export natural gas to its neighbors, according to Iran 20 years development plan, Iran has to increase its share from world natural gas to %10. Iran signed agreement with Pakistan, Oman, and Iraq to export gas. At present only Iran-Iraq pipeline near to officially open. Pakistan is planning to import more LNG from Qatar, and last week Russian giant Gazprom announced that it  is considering the potential of delivering liquefied natural gas (LNG) supplies to Pakistan by October 2017, Pakistan and Russia signed an intergovernmental cooperation agreement for the delivery of liquefied natural gas in October last year. Pakistan currently has two LNG import terminals in operation in Karachi, however, with a total capacity of around 9.5 mtpa, a significant supply shortfall of 19 million tons of LNG per annum is still expected. It seems that if TAPI will be successful and Pakistan import more LNG from Qatar and Russia there is no more need for Iran natural gas and Iran-Pakistan pipeline.


How do you evaluate Iran’s energy diplomacy?


Energy diplomacy is a reaction to geopolitical threats and limits. In other words, using diplomatic mobility, economic planning, developing technical capacities and using economic resources to provide all conditions required for activating energy diplomacy. Iran’s share in the world energy market is insignificant. Iran could play a more active role in the world energy market, and mobility in production, export, marketing, exploration and extraction in the energy sector could create a special position for every country. Iran must be more active in foreign diplomacy to eliminate problems with its neighbors.


Interview by Payman Yazdani


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As Iran licks its wounds post Trump snap, concerns grow further afield in India, Pakistan

US President Donald Trump’s decision to exit the Iran nuclear deal may have pleased most in the Gulf region but it is beginning to have an impact further afield – more precisely in India and to some extent in Pakistan.

India has had delicate energy equations with most energy suppliers in the region and this latest turn of events has only made it difficult. India’s Energy Minister Dharmendra Pradhan, during his visit to the UAE earlier this week, played down the crisis and hinted at a wait-and-watch approach.

Analysts, however, have been expressing concerns over the turn of events suggesting India will have to re-assess its energy policy. For most such observers the trouble starts with energy security but extends to rapidly changing geo-politics.

Lt. Gen. KJ Singh (Retd.), strategic analyst and India’s Former Western Army Commander, emphasizes that besides being an essential contributor to India’s energy security Iran is “also a gateway to Central Asia”.

“In the long run we have abiding interests in relationship with Iran. In medium term, we need to push Chabhar [port] project and in immediate, we have concerns on pricing of crude and gas. Difficult time for us indeed,” Lt. Gen. Singh says.

Limiting options

Dr. Mahendra Gaur, Director of New Delhi-based Foreign Policy Research Center, says Trump’s move has serious implications for India as higher price for oil will limit the country’s options. He adds another dimension to India-Gulf relationship that neither side can afford to lose sight of.

“Tension in the region would adversely impact the welfare and safety of Indian expatriates in West Asia and even a sharp decline in the remittances is not ruled out. More importantly, according to Dr. Gaur, “an impending hike in oil prices due to restricted market would hurt Indian economy.”

He also concedes that India may not find it easy to continue with Iran’s Chabahar port project, which may “dash her quest to link with Central Asia”. Clearly, the move meant to curb Iran’s ambitions appears to be having a cascading effect beyond the region.

Shahriar Hendi, Director at Canada’s Royal United Services Institute, says in the long run, new US sanctions on Iran would drastically limit Iranian oil exports to India. “The previous set of sanctions dropped Iran from the 3rd largest to the 7th oil supplier to India, while lifting of those sanctions enabled Iran to return to her 3rd position,” he says.

Supply-side worries

For Ketaki Sharma, Founder & CEO of Algorithm Research, the collapse of the Iran deal has led to a spike in global crude oil prices due to supply-side worries. “For India, as a net oil importer with twin deficit – current and the fiscal deficit – this has adverse macroeconomic implications,” she says.

Sharma explains that more expensive oil imports will fuel inflation, making Indian goods less competitive in the short run and shrinking corporate margins; thus impeding overall growth. However, beyond these broader macroeconomic implications, she also expects some strategic moves to mitigate risks.

“In the last round of sanctions on Iran, India had negotiated its Iranian crude oil purchase in Indian Rupees (INR). We expect to see this happening this time around as well – a positive move for the INR,” she says. Since the last oil price surge, India has also upped its game on energy security, using the period of cheaper crude oil enter long-term supply contracts with the UAE.

According to Sharma, in this backdrop, the current spike in oil prices will likely be less adverse in macroeconomic terms vis-à-vis that in the last cycle of higher oil prices. “Overall, the macroeconomic pain points will likely remain a cause for concern but perhaps to a lesser degree this time around,” she says.

Mihir Kapadia, CEO and Founder of Sun Global Investments, believes oil markets have been restrained as Iran sanctions remain unclear. “Oil markets are expected to be slightly bearish until further clarity emerges over how Iran’s major oil and consumers react to the sanctions,” he says.

Kapadia also cites the example of the pre-JCPOA period when Iran sold its crude and gas in Indian rupee denominated transactions to circumvent the US sanctions, which would arise if the US dollar is used. “Should other countries personalize their transactions as well, oil markets will find it tough to be bullish,” he says.

Rupee-rial settlements

Despite the raised eyebrows, this isn’t an entirely new situation for India. Even while sanctions were imposed on Iran till a few years back, India continued to export agro commodities through rupee-rial settlements.

Yet, according to Rahul Mazumdar, Chief Manager: Research and Analysis, at Export-Import Bank of India, oil remains an important constituent of India’s trade relationship with Iran. “India though have been astute to diversify its crude import base from across the globe, the northward movement of Brent price will be a cause of concern if supplies are restricted,” he says.

Mazumdar also stresses on the bigger picture of India’s geo-strategic interest in Iran. “Post lifting of sanctions India has committed toward building the Chhabhar Port and a railway line in Iran, which would provide India direct access to Afghanistan, and Central Asia,” he says.

For Mazumdar, these projects are of immense importance given increasing Chinese influence at the Gwadar port in Pakistan, which is less than 100 kms away from Chabhar. According to him, India will wait and watch for the time being, especially given the fact that the European counterparts, including China, at JCPOA have not been in favor of the US decision.

Iran-Pakistan natural gas pipeline

Washington-based senior energy security analyst, Omid Shokri Kalehsar, says regionalism has been at the core of Iran’s policy in its relation with neighbors, and energy was its leverage. If Shokri is to be believed, this arrangement is set to go off-balance.

“Iran has some energy projects with India and Pakistan. But it seems that after US withdrawal from nuclear deal, energy projects will face serious problems related to financial resources, and technology,” says Shokri.

Shokri cites the example of Iran-Pakistan Natural Gas pipeline project, which began in March 2013. “The 2,700-kilometer-long pipeline is meant to deliver gas from the Assalouyeh Energy Zone in south western Iran to Pakistan. Pakistan needs foreign investment to realize this project and is looking to get financial resource form China to complete required infrastructure in its territory,” he says.

According to Shokri, these changed circumstances will impact Pakistan as much as India. “Last month CEO of Russian firm Gazprom said that this company is considering selling LNG to Pakistan. However, after the collapse of nuclear deal, Pakistan may concentrate on TAPI project and more LNG supplies from Qatar and may be from Russia,” he says.

While energy consumers scramble to ensure supplies to keep things running, the long-term impact of Trump’s withdrawal from Iran’s nuclear deal will keep the wider region on the edge.

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