Is Iran alternative to Gazprom?

Several Middle East nations, namely Iran, Iraq and Syria, have recently signed a memorandum on building a gas pipeline through Lebanon to Western Europe with its resource base being the South Pars field in Iran. The 5,000km long pipeline project is estimated at $10bn.

Iranian lobbyists, who convince the public of Europe’s intention to quickly substitute Russian natural gas with the Iranian fuel, have already positively assessed the memorandum, which is just a declaration of intentions so far. From the purely technological point of view as well as economic perspective, constructing a pipeline from Iran to Europe is quite possible. With corresponding foreign investments in production, Iranian gas reserves may well enable the Islamic state to become one of the leading fuel suppliers to the EU pushing aside other competitors including Gazprom. Actually the ill-fated Nabucco project was initially based on Iranian gas.

But in practice this scenario is unlikely due to political risks. Despite the accelerated pace of Islamization of Europe, European politicians are not ready yet to dare to replace “unreliable Russia” with allegedly “reliable Iran”. Slogans of the necessity to remove neighboring states from the political map do not really find understanding in European capitals, which will impede practical negotiations on large-scale gas supplies. The US factor is also in place – amid tough confrontation between Washington and Tehran it would risky to lay pipelines from Iran to Europe. Moreover, at the next elections to the While House “peacekeeper Obama” may be succeeded by a Republican candidate who will share a more traditional approach of the US Establishment to the Middle East policy.

Investments may be lost also because of possible combat operations between Iran and Israel. In the next few years the Iranian regime will accumulate capacity to create an atomic bomb, which may well lead to a preventive (as Israel warns) strike by the Jewish state. This consequently may result in a regional conventional or nuclear war.

One also should not forget about discontent with Iranian expansion in the Arab world. Saudi Arabia’s Prince Turki al-Faisal directly declared his country would produce its own nuclear weapon should Iran create the bomb. Thus, already in the next decade a large-scale Saudi-Iranian war should not be ruled out coupled with traditional Sunni-Shiite confrontation. Lately Tehran has been promising to ship cargo to Bahrain to assist local Shiites considering actions of the Saudi military in this country as suppression of the Shia uprising. Indirect collision of Saudi Arabia and Iran, the so-called proxy war, is already observed in Syria being one of the detonators of the unfolding civil unrest in this state.

Analyzing risks of gas transit in this region there is another important factor that should not be omitted – a possibility of resumption of a full-scale civil war in Iraq between the Shiites, Sunnis and Kurds after the US finally withdraws its armed forces from this country. Different ethnic and religious groups in Iraq may have contradicting ideas about the belonging of this or that deposit or a pipeline to certain owners.

Considering all these factors, the desire to replace Russian natural gas with the Iranian fuel would be a risky decision by European consumers to say the least.

By Stanislav Mitrakhovich, NESF leading expert