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Iran wants to export gas it cannot supply

By Bill Samii
Vol. 3, No. 1,
January 3, 2000

Iran's Deputy Energy Minister Akbar Nematollahi said that Iran's power stations have been threatened for the last two weeks by a natural gas shortage, IRNA reported on 27 December. He said: "For two weeks, we have had a shortage of three million cubic meters of gas per day." Nematollahi added that demand is high due to the cold winter, and "if the power stations were not resupplied, the country would experience serious problems."

But if Iran is incapable of meeting its domestic requirements, it nonetheless has been making impressive promises about its plans for exporting gas. Indeed, there is very little correlation between these promises and real possibilities.

For example, the National Iranian Oil Company announced that "Iran is now putting the finishing touches to its natural gas pipeline link-up with Turkey, thus enabling it to embark on transmitting its natural gas to its neighbor for the first time," according to a 15 December Reuters report. But Turkish Energy Minister Cumhur Ersumer said construction of the Turkish part of the pipeline is not complete and he did not think the Iranians have completed construction either. Ersumer added another cautionary note: "We know that Iran does not have the amounts of gas that it has pledged to us."

Comments by Hamadollah Mohammad-Nejad, Managing Director of the National Iranian Gas Company, were a bit more restrained, although he did say that the NIGC will be ready to export gas to Turkey by January 2000 per its contract. He added, according to IRNA on 22 December, NIGC has completed the "executive operations of the project for the transfer of gas in order to fulfill its undertakings .. and to prepare the ground for export of gas."

Now it seems that Turkish officials will be in Iran in February to discuss the delay in construction of the pipeline, according to IRNA on 25 December. Gokhan Yardim, director general of Turkey's state-run oil company, Botas, will head the delegation.

A planned gas pipeline from Iran to the United Arab Emirates also is facing difficulties. The pipeline is to take gas produced by Total from Iran's Sirri E field to Dubai. Mirza al-Sayegh, vice-president of Dubai's state-owned Emirates Oil Company (ENOC), said talks with Iran have been prolonged because of disputes over "technical points," AFP reported on 7 December. While al-Sayegh would not identify the specific problems, industry observers said negotiations are continuing over prices and volume. Negotiations began in 1995.

Construction of a gas pipeline from Iran to Armenia also has been delayed, Dow Jones Energy Service reported on 26 November. 100 kilometers of the 140-kilometer pipeline will be in Iran, while the rest will be in Armenia. The Iranian charge d'affaires in Yerevan said the main obstacle is a lack of Armenian funding. But the managing director of the Russian- Armenian Amrosgazprom firm, Roland Adonts, said that the Russian gas company Gazprom has offered to provide $120 million for the pipeline, according to a 15 November Interfax report. Various details of the project, such as the price of Iranian gas, have not been settled yet.

And a gas pipeline from Iran through Pakistan to India was discussed during Pakistani leader Parviz Musharraf's recent visit to Tehran, although this too has been delayed. Pakistan could earn transit fees of $500-600 million. The pipeline from Iran's South Pars field to Pakistan would be built by the Oppressed and Disabled Foundation (Bonyad-i Mostazafan va Janbazan). The para-statal foundation's partners will be Royal Dutch Shell, British Gas, and Petronas, Islamabad's "Pakistan Observer" reported on 15 December.

Iran's natural gas reserves rank second in the world. Speaking at a Paris conference on world energy markets, Russia's Academician Anatoliy Dmitriyevskiy suggested that gas-exporting countries, such as Iran, form a cartel similar to the Organization of Petroleum Exporting Countries (OPEC). Dmitriyevskiy said that Russia, Algeria, and possibly Norway could be the other members of this "gas OPEC," "Rossiyskaya Gazeta" reported on 9 December. Iran is not averse to such an organization, having made similar proposals in November (see "RFE/RL Iran Report," 15 November 1999).