Iranian gas can reach Europe through connection of Islami pipeline to Nabucco

Oil&Gas Materials 27 July 2011 20:54 (UTC +04:00)

Azerbaijan, Baku, July 27 / Trend A.Badalova /

Iran's gas could be delivered to the European markets by connecting the planned "Islami pipeline" to the Nabucco pipeline, Editor-in-chief at Eurasia Energy Observer Andrej Tibold said.

The Nabucco project is actually based on older plans for the construction of a gas pipeline that would bring gas from Iran to Europe, Tibold told Trend via e-mail. Because of political constraints related to Iran, the 'updated' Nabucco project was forced to focus on the Caspian region for its gas supplies instead.

"If such an Iran-Iraq-Syria pipeline would materialise, it could in theory easily reach the European market via Nabucco, provided of course that Nabucco is built. Therefore both pipelines are not necessarily to be considered as competitors," he said.

The oil ministers of Iran, Iraq, and Syria signed an agreement in the Iranian city Asalue on Monday to build a 5,000 kilometer-long gas pipeline supplying Iranian natural gas to Europe.

The project will cost $10 billion. The gas pipeline will stretch from the Iranian gas-bearing region Asalue in the Khuzestan province, to the Iran-Iraq border, and further to Syria, Lebanon, and across the Mediterranean Sea into Europe.

Its capacity will be 110 million cubic meters of gas per day. The agreement for gas transit to Europe, Iraq, and Syria will be completed by late 2011. The project will be implemented within five years.

Nabucco gas pipeline project involves the gas supply from the Caspian region and Middle East to the EU. Participants of the project are Austrian OMV, Hungarian MOL, Bulgarian Bulgargaz, Romanian Transgaz, Turkish Botas and German RWE companies. Each of participants has equal share to the amount of 16.67 percent. Construction of gas pipeline is planned to be launched in 2013, the first supplies - in 2017. Maximal capacity of the pipeline will hit 31 billion cubic meters per year.

Tibold believes this Islami pipeline project mainly promoted by Iran is a way for Iran to show that it's still prepared to start exporting gas to Europe. But Iran is surely aware that under the current conditions Europe is not ready to take any Iranian gas.

Given the U.S. sanctions, Iran will face difficulties to develop the South Pars field , since it will need the assistance of foreign companies and their technology, mainly Western, Tibold said.
"So this raises the question whether Iran would actually be able to supply the needed volumes to this pipeline. Moreover, Iran currently imports gas from Turkmenistan to cover its domestic demand," he added.

Whether Iranian gas will eventually reach Europe by pipeline will very much depend on the political climate in Iran. He said.

Tibold noted that Iran could ultimately decide to develop the South Pars field for the quickly developing global LNG market. For this it would need the support from foreign partners. Since Western companies cannot do business in Iran, Chinese companies, who are quickly catching up with LNG technology, could possibly be among them, he said.