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Iran pins hopes on gas output increase

27 May 2015 [10:05] - TODAY.AZ

/By AzerNews/

By Sara Rajabova

With nuclear talks between Iran and six world powers nearing to an end, there have been hopes the resolution of the decades-old nuclear dispute would open new business and investment opportunities for Iran, as well as offer a new energy source for those energy-dependent countries.

The Iranian market has appeared most alluring to foreign companies and it has drawn much attention toward Iran, especially after world powers and the Islamic Republic reached a tentative framework agreement in Lausanne last April.

In this regard, Europe that is heavily dependent on energy imports and striving to reduce its energy reliance on Russia is keeping the possibility of importing gas from Iran open.

Europe has long been struggling to end its dependence on Russian natural gas - which supplies about a third of all of Europe’s gas requirements. Europe has been desperately trying to diversify its energy supply routes as the ongoing Ukraine crisis has strained EU countries’ relations with Moscow.

Prospects for a nuclear deal that would free Iran from sanctions raised new hopes among EU states.

"It's one of our priorities," Miguel Arias Canete, EU commissioner for Climate Action and Energy has been recently quoted by AFP as saying.

He said Iran was a new possibility in terms of gas imports by Europe, if Tehran's nuclear negotiations would lead to a final agreement.

Iran also stands ready to resume its gas exports to Europe should sanctions be lifted. Iranian officials said the Islamic Republic can serve as a reliable and steady source of natural gas for Europe.

Iran sits on 34 trillion cubic meters of gas which accounts for 18 percent of the world’s total and largest reserves, putting the country ahead of Russia and Qatar, according to BP estimates.

The European Union and Iran have held unofficial talks on gas import to Europe a while ago, according to Iranian media.

Commenting on the issue, Kamran Dadkhah, a professor of economics at Northeastern University in Boston, Massachusetts told AzerNews that increased investment and the use of advanced technologies would increase Iran’s oil and gas production.

He noted that at present Iran has invited German companies to invest in Southern Pars gas fields for export to Europe.

In early May, Iran’s Petroleum Minister Bijan Zangeneh discussed German investments in Iran’s oil, gas and petrochemical industries.

Over the past years, Iran has been making efforts to increase its gas production and exports by attracting foreign and domestic investments to South Pars gas field, which are in Iran’s territorial waters in the Persian Gulf.

Dadkhah also said there have also been talks of reviving the abandoned Nabucco pipeline.

Earlier, reports said Bulgarian top officials have started diplomatic talks with Iran to encourage the country to return to the Nabucco project – a pipeline plan which envisaged to take natural gas from the Caspian region and the Middle East to Europe.

However, this project lost its actuality after the TANAP and TAP projects - important parts of the Southern gas corridor.

Europe is currently working on a route - Southern Corridor, in order to transfer Caspian gas from Azerbaijan. The EU is also considering the possibilities of Turkmenistan and Iran’s involvement to the project in the future.

Iran’s Fars reported in mid-May that some Caspian littoral states have also asked Iran to join a network of pipelines which is being built to transfer natural gas to Europe.

Iran’s joining the international energy market was welcomed by energy importing countries, however, this fact is not playing into the hands of other big energy producers, namely Russia and Saudi Arabia.

Commenting on the issue Dadkhah said in the international oil market Iran is in competition with Saudi Arabia and Russia.

“An increase in Iran’s oil production and export would be detrimental to their interest, particularly in the current market conditions when oil prices have declined,” he said.

He added that as far as supplying gas to Europe is concerned, Iran is in direct competition with Russia.

“For sure, Saudi Arabia and Russia would not sit idle while Iran increases its oil and gas exports. Especially since that there are political tensions with Saudi Arabia over Yemen and that Russia is in a dire economic condition,” Dadkhah said.

Jan Kalicki, former counselor for international strategy at Chevron and public policy fellow and energy lead at the Woodrow Wilson International Center for Scholars also considered that for Tehran’s traditional rival, Saudi Arabia can be expected to maintain its policy of defending its market share, even at lower prices, Reuters reported.

URL: http://www.today.az/news/regions/141014.html

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