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Europe Can’t Rely on Russia for Gas Supply, Turns to Iran – Paper

September 10, 2008

Text of unattributed report headlined “Europe’s efforts to buy Iran’s gas: Many high ranking financial and political delegations are on their way to Tehran for talks ” published by Iranian news paper Jam-e Jam website on 8 September

It appears that the confrontation in Abkhazia and South Ossetia between the West and Russia is providing a timely economic opportunity for Iran’s economic, energy and gas exports. According to our reporter, following the relatively widespread political disagreements which have occurred between the West and Russia over Georgia, and the ensuing consequences, the West is now worried that Russia will take retributive measures in the field of energy and gas exports, an area which is the Achilles’ heel of a large number of western European states.

This is particularly pertinent as winter comes close. The end of September is the time of review of the costs and conditions for gas sales to needy customers. Europe’s important countries such as France, Hungary, Austria, Slovakia, Germany and Poland, have, over the past two and a half years, become all too familiar with the short history of Russia’s behaviour and this country’s inclination to play the powerful oil and gas card. They have tasted its bitter reality and so take the issue of diversifying oil and gas sources much more seriously.

Europe has a number of options to choose from in its quest to diversify its energy sources. Considering the relatively rich supplies of oil and gas they have, Turkmenistan, the countries surrounding the Caspian Sea and the countries in the North African continent are suitable options. However, it can be said that the most important country for Europe when it comes to diversifying its oil and gas sources, one which is its first choice and dependable in all aspects, is Iran. After Russia, Iran has the second-largest natural gas reserves in the world, and in this respect it stands head and shoulders above its rivals. Consequently, over the last few days, the European Union has begun noticeable political efforts to establish political and diplomatic contacts with Tehran. It hopes that through two methods of negotiating over new projects for the construction of a pipeline and activating the potentials of previous agreements, it can confront the challenge of a possible shortage of gas supplies caused by Russia, even though this is a long-term prospect. According to diplomatic sources in Tehran, the European Union’s main priority is to use the potentials of the previous agreements which, due to political reasons, were put on the back burner such that the agreements were signed but they never reached the implementation stage.

Europe’s cold memories of Russia

Over the past year, and until the final weeks of 2007, the inhabitants of Western Europe were concerned about their supply of gas from Russia. They have cold memories in this regard. The most famous of these memories is the speech given by Vladimir Putin, the former Russian president, on 31st December 2005 in which he gave [asked] Ukraine, which is seen as one of the closest allies of the West in the territory of the former Soviet Union, until the 1st January 2006 to either accept the new price announced by this country for gas or face its gas supply being cut off.

In his orders to Medvedev, the current president of Russia, who at that time was the chairman of Gazprom, the price of gas for Ukraine rose from 50 dollars per thousand cubic metres to 230 dollars. Under such conditions, the pro-western president of Ukraine refused to agree to the proposal, so the Russians cut off the supply of gas to this country. As a natural consequence of this, gas supplies for Europe which transited Ukrainian soil were also reduced by 50 per cent, and a large part of Europe in extremely cold temperatures faced either reduced gas supplies or none at all. And this is not the only bad memory the Europeans have of Russian gas [supplies]. In 2006 too, only a few hours after Medvedev’s victory, Gazprom called on Ukraine to pay the 1.5 bn dollars it owed it for gas supplies. This created another challenge to the supply of gas to Europe, though it was not as serious as the previous one.

In addition to Ukraine, Russia has also exerted pressure on other countries which transit gas and oil to Western Europe, amongst these are Georgia and Armenia. For example, in the month of Aban 1385 [November 2006], it increased the price of gas exported to Armenia from 110 dollars per 1000 cubic metres to 230 dollars, more than doubling the cost.

The culmination of these events has brought Europe to the conclusion that over-dependence on the supply of energy from Russia will create a serious challenge for this continent, one which has to be resolved, and energy must be obtained from a variety of sources not through reliance on one source alone. The recent military conflict in the separatist regions of Abkhazia and South Ossetia and the worry about a delayed reaction from Russia as winter approaches have once again proved the correctness of this view. Therefore the situation is that the diplomats are packing their suitcases and heading off for Tehran.

Delegations on way to Tehran

Our reporter has obtained information that a number of high- ranking political and economic delegations are on their way to Tehran to hold talks on activating previous projects for the export of Iran’s gas to Europe. The first and largest of these teams, headed by the European Union energy commissioner, will arrive in Tehran within next two weeks. This trip has two aims, the first is to revive the agreement signed between Iran and Turkey in Tir 86 [July 2007] for the export of Iranian gas to Europe across this country’s land, and the second is to hold talks over the planning and inauguration of new pipeline projects with Iran.

Kazem Vaziri Hamaneh, Iran’s former oil minister, and Hilmi Guller, Turkey’s energy minister, signed an agreement on 23 Tir 86 [13 July 2007] according to which Turkey would allow the construction of a pipeline and the transit of Iran’s gas to Europe across its land, in exchange for its participation in the development of the South Pars gas field. Up to now, however, this matter has remained at the stage of agreement [as received].

Originally published by Jam-e Jam website, Tehran, in Persian 08 Sep 08.

(c) 2008 BBC Monitoring Middle East. Provided by ProQuest LLC. All rights Reserved.