08.07.2016 Author: Petr Lvov

Gas Powerplay Geopolitics in the Middle East


When less than a week ago Russia and Turkey unexpectedly began normalizing their relations, experts were left guessing what this normalization was all about. Yet, they have completely forgotten about a very important economic factor – gas. One must note that the United States and the European Union maintain a sanctions regime against Russia in the gas sector, while having lifted their embargo against Iran, pitting those two states against each other in a battle for energy markets around the world, including European markets. This has created a rather uncomfortable situation for both countries, which shared a mutual distrust towards each other but were forced to cooperate in order to achieve a common goal – to push back the dictates of the US and the West as a whole.

And then again, there were rumors of secret deals between Washington and Tehran over the Iranian gas pipeline project that could stretch across Iran-Iraq and Syria. One couldn’t help but note that the three-parties memorandum on the construction of such a pipeline that was to deliver Iranian gas to Greece was signed in Bushehr back in 2011. The pipeline with a projected capacity of 110 million cubic meters per day was to begin operations in 2016. The total amount of investments in this project was to approach 10 billion dollars. However, the conflict in Syria has jeopardize this project, although there were rumors that the Iranians had allegedly built a 350 miles long section across its territory to carry on the construction when the time is right. But nobody has ever seen this.

In light of the current balance of power in the region, this project seems to be totally unrealistic. And the real problem is not the absence of any definitive conclusion to the Syrian conflict, which obstructs the construction of the pipeline. Iran’s regional rival, opposing this project, is directly are directly associating this project with Tehran’s capacity to establish a “Shia arc” which would encompass Iran, Iraq, Syria and Lebanon, therefore Tehran’s rivals would never allow this project to become a reality.

One couldn’t help but notice that the so-called revolt in Syria began virtually simultaneously with the signing of the memorandum on the construction of the Iranian pipeline. Arabian monarchies immediately began taking steps to derail this project at whatever cost. Experts note that the Saudi-led camp despises the very idea of the Shia arc” being created, and Turkey and Saudi Arabia and not the only ones to ring the alarm, since Israel dislikes this idea as well.

That is why these states remain deeply concerned with American attempts to hold negotiations with Iran behind closed doors. The successful squeezing of the Russian Federation from European gas markets plays a pivotal role in Washington’s policies, therefore it has been obstructing the construction of a Russian gas pipeline across Turkey to Greece (the so-called “Turkish Stream”). It leaves us with a fairly curious group of interests, we have Moscow, Doha, Riyadh, Ankara, Tel Aviv on one side, and Tehran, Washington and Brussels on the other. The problem is that Russia cannot be an ally to Saudi Arabia or Qatar, since all of the GCC countries depend on the United States in matters of security.

However, Russia has nothing to be worried about yet. Despite the fact that Iran can boast the world’s largest reserves of natural gas (18.2% of total reserves), it can not compete with Russia in the short term for the following reasons:

  • low production volumes of natural gas in Iran;
  • strong domestic demand;
  • a relatively small share Tehran has in the world gas trade which amount to 1% of all contracts;
  • outdated extraction technology;
  • 60% of Iranian gas is located in the world’s largest offshore field in South Pars and is difficult to extract;
  • the pressure Saudi Arabia, Qatar and Israel are applying on potential buyers of Iranian gas

At the same time, Russia and Iran have joined their forces to prevent the implementation of the “Western” project to build a trans-Caspian gas pipeline to the EU (Nabucco), which was supposed to provide Europe with Turkmenistan gas via Azerbaijan and Turkey. The official reason for the stalling of the project: “undefined legal status of the Caspian Sea.”

So Ankara, after facing a sharp deterioration of its relations with Russia after downing a Russian SU-24 warplane over Syria, has finally understood that it is better to become a transit state for Russian gas than wait for the successful implementation of the Iranian project. Moreover, the Kurds supported by the US are a step away from capturing Al-Raqqah in northern Syria, while Sunni tribes are nearing the Iraqi city of Mosul.

While no major change has taken place, Tehran plans to sell its gas at a very low price in the strategic port of Chābahār in the Persian Gulf which will likely become a part of the Chinese New Silk Road project. It has also aimed at establishing itself as a regional leader in terms of gas supply across the Middle East and to Asia.

Moscow, however, is reluctant to lag behind as it has already announced that is going to increase its production capacities of natural gas by 40% until 2035, taking its own share of Asian markets.

Yet another blow for Iran is news that Russia plans to proceed with the implementation of theTurkmenistan – Afghanistan – Pakistan – India (TAPI) project, which was one of the main reasons for NATO’s occupation of Afghanistan. This will effectively be the end for the gas pipeline running through Iran – Pakistan – India, which would help to strengthen the geopolitical position of Iran in the region. Russia has offered New Delhi the resumption of construction, while Russian-Chinese companies have already started extracting gas in the Afghan province of Sari Pul. So maybe that’s why the United States is trying to expand the chaos it creates across the Central Asia.

Now Tehran faces a choice: whether to treat Russia as a competitor, or as a partner that can serve as a bulwark against Israeli and Saudi plans against Iran.

So far one thing is clear: today, even such a gas superpower like Iran cannot replace Russia in Europe. But Turkey could easily become a “southern hub” of gas supplies from Russia to the EU, thus burying Ukraine as a transit country for Russian gas, and with it the root cause of the regular extension of the anti-Russian sanctions. There will be no Ukraine as we know it now without the Russian gas transit, therefore there will be no motivation for continued destabilization in Ukraine once it is circumvented. So a partnership between Moscow and Ankara can affect the whole geopolitical situation, including the Chinese “Silk Road”. After all, Moscow does not need it, what it needs is the “Southern Corridor” across the Baltic Sea and the Caspian Sea to the Indian Ocean. Moreover, Russia doesn’t need Iran as a powerful gas player either. Apparently, Ankara has finally comprehended this fact.

Peter Lvov, Ph.D in political science, exclusively for the online magazine “New Eastern Outlook.