Russia and Iran to set up a joint gas company

Russia and Iran are beginning a big geopolitical game. On Thursday, Iran's Foreign Minister Manuchehr Mottaki proposed setting up a joint gas company with Russia.

Gazprom made a similar offer several years ago, but Iran has only now got round to it. Russia, as a result, is ridding itself of a potential rival to supply gas to Europe bypassing Gazprom. Iran, in turn, will be able to expand its gas exports. To eastern countries, at least.

Although Iran produces more than 150 billion cubic meters of gas a year, it consumes it all, with its border regions even purchasing gas from Turkmenistan, something which makes more sense economically.

"Iran has no access to external gas market outlets. Paradoxically, the country with the world's second largest gas resources has to import it," said Konstantin Simonov, general director of the National Energy Security Fund.

Europe and the United States, to put Russia on the fringe, have come up with the Nabucco gas project, which theoretically was to be filled with Azeri and Turkmen gas, but actually looked to Iranian deposits.

In the opinion of experts, the Iranian oil and gas sector needs at least $160 billion to develop properly. However, U.S. invasion threats have scared investors away.

Tehran has even planned selling gas to its eastern neighbors. Just recently, it discussed at length plans to build an Iran-Pakistan-India gas pipeline. Iranian officials showed much diplomatic skill in persuading hostile India and Pakistan to cooperate in laying the pipe. All three parties allowed for Gazprom's participation.

But the region's vital project got stalled, again largely due to U.S. interference in the political situation in South Asia.
In Simonov's view, in this way the U.S. is trying to strip China of sources of energy and slow down its maddening economic growth.

In the upshot, after weighing all the factors for and against, Iran has chosen Russia as a strategic ally (together they share half the world's explored gas reserves).

Tehran has realized that gas (its production, transportation, treatment, sales and prices) is one of the key political trump cards when a country is partly isolated from the rest of the world.

Source: Gazeta (What the Russian papers say, RIA Novosti - December 14, 2007