| Iran invites Russia to regulate gas prices and flows Europe, which announced the need to diversify gas supplies, received unpleasant news. The second largest holder of gas reserves in the world after Russia, Iran is not going to get involved in fierce competition with Moscow in the gas sector. And even more than that, he invites it to coordinate actions on the global gas market, up to an agreed pricing policy. In this case, the Russian-Iranian gas union could control 43% (75.5 trillion cubic meters) of proven world reserves and set the main parameters for market development for the long term. And in fact lead to the division of the market of the Eurasian continent into two large zones of influence, in which Europe will remain with Gazprom, and the promising market of India and the southern provinces of the PRC will belong to Iran.
In Shanghai, at a meeting with Vladimir Putin, Iranian President Mahmoud Ahmadinejad said that Moscow and Tehran can get more tangible results from cooperation. “Like, for example, in the field of gas. We can cooperate closely in terms of determining both the price of gas and the main flows in the interests of global stability,” the leader of the Islamic republic said in front of television cameras. “But we are still only at the beginning of the journey.”
Iran's proposals came as a surprise, but did not surprise Mr. Putin. “I know that our companies are negotiating to join forces in the oil and gas sector, including the creation of a joint venture. We support this initiative of our Iranian partners,” he said. Later, answering questions from Vremya Novostey, Mr. Putin explained that we are talking about creating a Russian-Iranian joint venture “on the basis of resource fields (of both countries - Ed. ) and creating an appropriate gas pricing mechanism.” “We will think about which deposits to offer,” the Russian president emphasized. According to him, Tehran is also seriously calling on Gazprom to participate in the construction of the Iran-Pakistan-India gas pipeline (and Vladimir Putin yesterday confirmed the possibility of the concern’s financial and technological participation in this project). In addition, in Shanghai at the highest level they discussed the possibility of extending the pipeline to China. The Russian concern has long believed that this project will allow the majority of Iranian resources to be directed eastward and thereby at least delay their appearance in Europe.
Just a week ago, at the opening of the World Gas Congress, Russian Minister of Industry and Energy Viktor Khristenko publicly questioned the feasibility of such alliances. “I don’t think that cartels or similar alliances represent the future of the gas industry. I don’t see any sense or necessity in this,” the official said, noting, however, the obvious dependence of the market on several large players. Iran is not yet such a player (the country produces only 85 billion cubic meters per year, almost eight times less than in Russia). But the possession of gigantic reserves, which can easily be delivered to Europe, makes Tehran a serious potential competitor to Russia in its main market. Especially in the context of Brussels' statements about its readiness to diversify, despite the costs associated with capital investments in infrastructure.
Now Europeans have only one tool to reduce gas dependence on Moscow - the rapid development of liquefied gas consumption. But this source is clearly unable to bring unconditional security. Firstly, due to limited supply, and secondly, due to greater flexibility and, as a consequence, the opportunity for the manufacturer to choose a more generous consumer. And here the EU will have to compete with the US, which has worked up an appetite for gas, and Asian countries that have infrastructural advantages in terms of increasing consumption of liquefied gas.
In addition, Gazprom is quite actively “processing” another major gas supplier to Europe - Algeria (10% of the market). By the end of the month, a representative delegation should arrive in Moscow and, as a result, sign a memorandum of cooperation between Gazprom and the state-owned company Sonatrach, after which the full “coverage of Europe” will become a matter not only of the distant future, but also of the present. Gazprom refused to comment on this topic.
However, it is unlikely that the cartel will be formalized in the near future. Moreover, these negotiations are already capable of strengthening the negative background around the image of Russia as the host of the G8 forum and a contender for the role of guarantor of international energy security. But bilateral agreements between Russia and existing and potential gas suppliers to Europe can become an effective mechanism for regulating the pipeline gas market in the interests of producers. Alexey GRIVACH, Arkady DUBNOV, Shanghai |
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