Russia and Turkey Benefit from This Situation

09 October 2012 | 13:33 Code : 1907763 Interview General category
An interview with Dr. Gholam Hossein Hassantash, university professor and expert on energy economics
Russia and Turkey Benefit from This Situation


As you are well aware, the European Union is talking about imposing sanctions on Iran's gas industry. What kinds of sanctions have been imposed on Iran's gas industry until now?

Our gas sector is not separated from our oil sector, and has not, hitherto, been included in sanctions; the same sanctions which have impacted the oil industry and its projects have affected gas projects as well and have caused delays in projects of gas production, especially in the South Pars phases.

These sanctions will include Iran's gas exports. Basically, to what extent is Iran considered as an exporter of gas and how much gas is sold to Europe, so much so that this sanction has been proposed?

In general, Iran is not recognized as a gas exporting country. We import gas from Turkmenistan and a small amount from Azerbaijan (seasonally) and export gas to Turkey. But our imports are more than our exports; hence, we are not recognized in the world as a gas exporting country. We do not export any gas to Europe, but we export gas to Turkey. Turkey imports gas from different countries; from Russia through a pipeline called Blue Stream (gas is exported from the bed of the Black Sea to Turkey); from the Republic of Azerbaijan, and even from Nigeria and Qatar and other countries, in LNG form. Turkey purchases gas from Iran as well and all this gas is injected into Turkey's gas network and it sells the extra gas in its network to Europe, which is seasonal and not of a substantial amount. Turkey’s total gas imports in 2011 were about 41.8 billion cubic meters (35.6 through pipelines and 6.2 billion cubic meters in LNG form) and its total exports in the same year were 0.7 billion cubic meters. It means that Turkey has exported about 1.7% of its imported gas.

Recently, Iran has repeatedly talked about its negotiations with Turkey to export gas to the European Union and Iran's Oil Minister, Rostam Ghasemi, has announced that Tehran and Ankara have agreed on exporting Iran’s gas to the European Union through Turkey. To what extent can these new sanctions impact these gas-related negotiations and interactions between Iran and Turkey?

I have no information about the claimed negotiations, but a few points must be considered: First, we unfortunately do not have any gas to export due to delays in different phases of South Pars and gas production projects. Part of this problem is related to sanctions, but, in my opinion, most of it is due to instability in management and mismanagement in the oil industry. Second, Turkey is willing to buy more gas from Iran and other countries but is not interested in Iran's gas transit; Turkey's strategy, since a long time ago, has been to use its geographical situation to transform itself into a gas hub for export to Europe. It means that Turkey wants to buy gas from different countries and export it to Europe itself. Third, at least right now with current sanctions, Europe does not demand our gas.

Considering the fact that we do not export any gas to Europe and soon we will not have any gas to export, what is the reason behind the issue of Iran's sanctions in Europe?

In my opinion, the objective of this proposal is to exert pressure on Turkey to stop its imports from Iran. If this proposal is adopted, it would mean that Europe would not buy gas from Turkey. Why? Because Europe says that since Iran's gas is mixed in Turkey's pipeline network and is inseparable, and since we should not buy gas from Iran, we cannot, therefore, buy gas from Turkey either. But, as I mentioned earlier, considering the fact that Turkey's exports to Europe are very limited, this measure will create an opportunity for Turkey to demand a cheaper price for Iran's gas with the excuse of being under pressure or to compensate for its lower income from exports, particularly now that there are differences between Iran and Turkey over the price.

At the present time, Turkey plays a central role in bypassing Russia's gas monopoly by the European Union. Aren't these sanctions to Russia's benefit and don't they lead to an even stronger Russian monopoly?

This is exactly right and these sanctions are very much to Russia's benefit. In my opinion, if there was a different political situation in Iran and there were no sanctions, the Europeans, even despite US opposition, would have bought gas from Iran, because having numerous sources to provide gas for Europe is a strategic issue. But these conditions will strengthen Russia's monopoly and this issue and similar measures are benefits which will naturally impact the positions of many of the parties with regard to solving Iran’s nuclear dossier and sanctions.

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