Iran takes over lead on Trans-Caspian project

Mar 17, 2015 12:00 AM

Iran decisively offered its territory as a potential host country for gas transportation as an alternative to the Trans-Caspian gas pipeline following the EU interest in diversifying its energy supplies.

Turkmenistan's desire to join the Azerbaijani-sponsored Southern Gas Corridor sprang big players in the region into action. The world's fourth gas producer is eager to join the European gas supply race. Iran's entry into the race could actually leave Russia's positions weakened.

Although some European countries intend to warm up their homes and industries through Turkmen gas imports, the underwater Caspian Sea pipeline is still regarded as a challenging option.

It is quite predictable that Iran will do its utmost to protect its authority and together with Russia it can do a lot more.

Delay in talks on the Caspian Sea status would seriously jeopardize any developments in the region.

Iranian President Hassan Rouhani earlier said Iran and Turkmenistan are one of the largest producers of oil and gas, and such kind of partnership will significantly expand in the future. He also added that “there is an interest (of Iran) in cooperation in the energy sector, including the supply of Turkmen electricity".

“Regional countries have a great capacity, which Europe can use to diversify its energy sources,” Ramezani said. That partially explained by Iran’s deviation from its final decision on the Caspian legal status. In other words, the Trans-Caspian project is impugned.

Iranian ambitions

Iran and Turkmenistan, with predominantly Muslim population, enjoy very good relations.

“The energy ties between Turkmenistan and Iran exist and they are on a cordial level," Alex Vatanka, a senior fellow at the Middle East Institute in Washington D.C.. "However, nothing strategic has been noticed yet. President Rouhani's visit this month, and signing of 17 agreements, might change that.”

In case the U.S. will lift sanctions, Iran’s economical growth will make it even more attractive for cooperation in the energy sphere. “There is a real desire on its part as Iran has always wanted to be the regional hub for energy trade and a bridge for Central Asian and Azerbaijani energy exports to markets in Europe and Asia. But U.S. oppositions in the 1990s and international sanctions in the last decade has kept Iran out from the competition,” Vatanka says.

The other issue is whether Iran can provide attractive commercial conditions for anyone seeking to use Iranian territory for energy exports.

He noted that much will depend on whether or not Iran can come free from its international isolation. In this case, most Central Asian states will desire to have close economic ties with Iran.

In fact, Iran’s willingness or at least a step toward a strategic agreement with Turkmenistan can be explained by its desire to escape from a long-term blockade and become Europe’s necessary strategic partner in gas supplying.

The other question is - will Turkmenistan use Iran’s offer or look beyond?

Vatanka noted that Turkmenistan has already established good ties with China in terms of gas supply. Also, if it wants to diversify, it has Iran to the south or it can look to Europe through Azerbaijan. There is also the Russian route to consider. It seems suspicious that Ashgabat would want to limit its options only to Russia and China.

As a reminder, Iran's infrastructure woes come at a convenient time for Turkmenistan. Since 2009, when a pipeline explosion led to a flare-up between Turkmenistan and the Russian energy giant Gazprom, Ashgabat has sought to expand its export base -- opening the second pipeline with Iran, and one with China that came with a 35-year supply agreement.

Turkmenistan is well known with its neutrality and its choice of potential partners remains unclear.

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