Weekly actual topics in Azerbaijan (July 13-17)

Analysis Materials 22 July 2015 12:16 (UTC +04:00)

Azerbaijani pipeline - only route for supplying Iranian gas to Europe

Long-awaited nuclear deal to put an end to over 10 years of talks between Iran and P5+1 (the US, UK, France, Russia, China and Germany) has finally been signed.
Signing of this agreement likely to pave way for lifting the sanctions imposed on Iran which will significantly affect the world energy map. This is while the export of Iranian energy resources, in particular gas remains as one of the main issues in which Azerbaijan can play a significant role.
Once the sanctions imposed on Iran by the West are lifted, Iran will get the right to sell its gas on European markets. Certainly, Iran has a great desire to do this. However, it is the moment when the opportunities do not fully coincide with desire.
The problem is not related to the shortage of gas reserve (Iran has more than enough gas reserve - over 34 trillion cubic meters, or around 18 percent of world reserve), but lacks necessary infrastructure.
Iran has no direct route for supplying its gas to Europe. The most convenient and acceptable route for delivering this country's gas to Europe is through Turkey. However, currently, Turkey has no transit pipelines, except for TANAP which is a part of the Southern Gas Corridor.
Another advantage of this choice is that by the time when Iran increases gas production and becomes ready to export it to European markets, TANAP will be fully ready to expand its capacity from initial 16 billion cubic meters to 31 billion cubic meters of gas per year.
Iran would need money and a lot of time to construct its own pipeline to Europe and create infrastructure. However, currently, Tehran doesn't have the needed amount of money and time for that. In this situation, it is much easier for Iran to join the Southern Gas Corridor rather than to create something from scratch.
Tehran will also need to resolve the investment issue, and those related to the creation of infrastructure that will deliver Iranian gas to Turkey. But apparently, Iran will join the Southern Gas Corridor sooner or later.
Thus, the Azerbaijani project is today the only and main route through which Iranian gas can be delivered to European market.