EU plans for Iran gas imports if sanctions go

LONDON -Reuters

Russi-West tension over Ukraine caused the EU to rethink its energy dependence on Russia. Therefore, Iran, which has the world’s second largest gas reserves after Russis, has emerged as a potential alternative given talks between Tehran and the West to reach a deal over its nuclear program.

The European Union is quietly increasing the urgency of a plan to import natural gas from Iran, as relations with Tehran thaw while those with top gas supplier Russia grow chillier.

Two “ifs” - the removal of sanctions on Iran and the addition of some pipeline infrastructure - are not preventing EU planners preparing, a European Commission source involved in developing EU energy strategy told Reuters.

“Iran is far towards the top of our priorities for mid-term measures that will help reduce our reliance on Russian gas supplies,” the source said. “Iran’s gas could come to Europe quite easily and politically there is a clear rapprochement between Tehran and the West.”

Russia is currently Europe’s biggest supplier of natural gas, meeting a third of its demand worth $80 billion a year. The EU has imposed sanctions on Moscow over the conflict in Ukraine, increasing the need for gas from elsewhere.

While sanctioned itself, Iran has the world’s second largest gas reserves after Russia and is a potential alternative given talks between Tehran and the West to reach a deal over the former’s disputed nuclear program.

“High potential for gas production, domestic energy sector reforms that are underway, and ongoing normalization of its relationship with the West make Iran a credible alternative to Russia,” said a paper prepared for the European parliament.

However, the paper added that Iran was not a credible alternative energy supplier in the short-term due to sanctions and large infrastructure needs before exports become viable.

Internal EU energy security documents seen by Reuters also describe plans to tap new non-European gas import sources in central Asia, including Iran.

Iran’s willingness

Iran, exploiting the reversal of old enmities caused by the upheaval of the Islamic State of Iraq and Levant (ISIL), is also keen to sell its gas. “Iran can be a secure energy center for Europe,” its President Hassan Rouhani was quoted on Sept. 24 telling Austrian President Heinz Fischer in New York. Tehran’s assertions over reliable supply are likely to ring alarm bells at Russia’s giant Gazprom, after interruptions to its exports via Ukraine in previous disputes scared Europe.

“Iran is trying to position itself in Europe as an alternative to Russian gas. It’s playing a very sophisticated game, talking with Russia on the one hand about cooperation on easing sanctions and also talking to Europe about substituting Russian gas with its own,” said Amir Handjani, an independent oil and gas specialist working in Dubai. “Given Russia’s current strategy politically, which is one of confrontation with Europe, I see the EU having little choice but to find alternative gas supplies,” he added.