Iran looks to join Nabucco axis
Published: 10 October, 2009, 08:34
Edited: 10 October, 2009, 13:01
TAGS: Investment, Markets, Russia and the global economy, Gas
Iran says it will supply half the capacity for the Nabucco international gas pipeline. It will invite foreign firms to overhaul its decrepit gas infrastructure, but Nabucco's key shareholder says that will not be enough.
Two years ago, Nabucco developer OMV said it would make "no sense" not to source from Iran. But Tehran's failure to engage with the project has shifted focus to the likes of Azerbaijan, and Iraq. Until now.
At the World Gas Conference in Argentina, the state's energy holding pledged to pump $5 billion in the next 5 years to bring its network to world standards. Azizollah Ramazani, Managing Director of the National Iranian Gas Company, says a key focus is Nabucco.
“The countries supplying natural gas for Nabucco don't have enough. We can get more than a 50% share. For this expansion, we need to have new gas refineries, and the new construction of pipelines.”
But Nabucco already wants to be in action by then. OMV says Iran could join from the second stage, in 2017. That will require more fundamental changes, according to Roland Wolk, Head of Communications at OMV..
“Nabucco is an open pipeline for all who want to supply. In a further stage, regarding Iran, where the political situation is changing in the next years, it could be an option.”
Nabucco's named after the opera where slaves break free from Babylonian king Nebuchadnezzar. The route bypasses Russia and is supposed to symbolise Europe ending dependence on Gazprom. But it's now starting to ring true, in more ways than one.
An opera house in the Argentine capital, where leading gas players have been meeting this week, is famed for its performance of the Verdi creation. What Nabucco shareholders never imagined is that the search for a supplier would become as long, and tortuous, as the piece itself.
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Nabucco has been delayed for two years. This is why it was easy for Iran to make an offer. Of course that the Iranian gas is really the only meaningfull way to fill Nabucco. And as they say, the Nabucco saga will not end until "the fat lady sings". In this opera, however, Iranian role will feature prominently. Whose project is it anyway? Ms. Clinton, in her confirmation hearning promised action on Nabucco. Now why would US Congress have any such inerest, as to have its top diplomat spend her energy on it? If Europe keeps on waiting on the clues from Washington, it will wait for a long time. Or it can take Iran's offer. But in that case, Caspian gas will be of value only, and only, if Turkmenistan sells the gas to Iran. And Turkmenistan can do that only if it sells "Russian" gas, that is, the gas that Turkmenistan sold to Russia until 2028. The new Turkmen finds will flow to China, as we already know. However, where is here the profit for US and UK majors? So, the problem is, US and UK majors will get their profits only if THEY unlock the Caspian and Iranian gas. Not if this can be done WITHOUT them, and with the cooperation of all in the region? Somebody may find a formula for profit sharing that these companies could earn, if they are let in on the action. But then, this is not on THEIR terms! So, what is the answer? More wars, more pressure --- until the price is right. Europe will then pay for "the freedom" by paying this surcharge to US/UK energy majors. South Stream sounds better and better.