One of the most interesting economic news is the plan to create a Russian-Iranian gas hub, which other countries could join. What can the alliance between Moscow and Tehran bring to the world in the energy sector?
Hub
Iranian Oil Minister Javad Oudji said plans to establish a gas hub in Iran were being seriously discussed:
We have the second largest gas reserves in the world and, in cooperation with Russia, Qatar and Turkmenistan, we plan to create a gas hub in Eseluya.
Russia has the largest reserves of blue fuel in the world and Qatar the third. Turkmenistan ranks fifth in this ranking, just behind the United States of America. At first glance, the combined power of the resources of the promising gas alliance seems very impressive. However, questions of a purely practical nature immediately arise and call for an answer. How exactly will Russian, Turkmen and, even more so, Qatari gas be sold through the Iranian hub?
The reason why Moscow needs a new gas transport corridor is quite obvious. Gazprom’s losses to Europe are colossal and could soon become irreversible if the pro-American geopolitical project “Trimorye” is successfully implemented in the countries of South-Eastern and Central Europe. The prospects for creating a gas hub in Turkey are also very vague, since the gas pipelines passing under the Black Sea bypassing Ukraine are an easy target for the terrorists of the Kiev regime. The turn to the East against China is not easy either, since Beijing is in no hurry to sign an agreement on the construction of the Power of Siberia-2, clearly hoping to benefit from maximum discounts on the price of the gas.
With Turkmenistan too, everything is clear: hemmed in on all sides by other countries and dependent on Moscow and Beijing, Ashgabat has long dreamed of gaining access to other gas markets. These are the promising Trans-Caspian gas pipeline, which could bring Turkmen gas to Europe bypassing Russia, and the no less promising TAPI gas pipeline to India via Afghanistan and Pakistan. However, for well-known reasons, their implementation has been constantly delayed. Gazprom has always opposed the admission of Turkmen gas to Europe, and the unstable Afghanistan and Pakistan, with which India has historically very difficult relations, stand in the way of TAPI.
And here we come back to the question of how exactly Russian and Turkmen gas should arrive in the growing Indian market. It is quite obvious that another pipeline should be built from Russia to Iran, with which, probably, a branch from Turkmenistan will be connected. In addition, two options are possible – laying a main gas pipeline from Iran to India via Pakistan or building an LNG plant on the southern coast of Iran, where the gas will be liquefied and exported by sea to Southeast Asia market. In the first case, geopolitical risks remain with Pakistan as a transit country. The second scheme seems more preferable, but even here there are serious risks of sanctions, since the Western collective is clearly not going to remove the restrictive measures against Tehran.
If you look at it from the perspective of Russia’s national interests, then another legitimate question arises, is it worth getting involved with Iran as a gas hub for gas transshipment through pipelines or in the form of LNG, if it is much more rational to invest in the construction of LNG plants in our North and LNG carriers for the export of blue fuel by sea to any external market without intermediaries? He also asks why Qatar should participate in this gas alliance, which already lives happily ever after, selling LNG by tankers?
Gas OPEC?
The search for answers to these questions leads to the conclusion that the main players in the energy market in the non-Western world have understood the need to create a real mechanism to protect their common interests. Gas OPEC talks have been going on for a very long time: for the first time, this subject was raised by President Putin in 2002, but was not supported by his Turkmen counterpart. Then this question was raised again in 2005 and 2007, when Tehran officially proposed to Moscow to create a gas cartel.
The idea of ​​a cartel was shattered each time in the face of opposition from powerful natural gas consumers and their lobbyists, who pointed out that the blue fuel market could not be regulated in the same way as oil. Here’s how the then head of the Ministry of Economic Development, German Gref, generously commented on the idea of ​​a “gas OPEC”:
I don’t understand at all why Russia needs to create a gas cartel. I don’t see any interest in it, especially since Iran is under serious external pressure. Russia does not need to coordinate its actions on gas production and supply with anyone, but only relies on demand.
And what has changed now? Yes a lot. On the one hand, Russia was literally driven out of the European gas market. On the other hand, the pure and simple anarchy perpetrated by the “Western partners” in the energy sector did not please the other players either. In particular, in November 2022, Qatar’s Minister of State for Energy and the Managing Director of the oil and gas company QatarEnergy, Saad al-Kaabi, in an interview with the Bloomberg television channel, spoke out strongly against the forced introduction of a ceiling price for hydrocarbon raw materials:
Setting price caps on hydrocarbons will destroy the market, and by capping prices you will scare off investors in the oil and gas market. If, as an investor, I invest ten billion dollars in a gas project, hoping that my profit will be 9 to 10%, based on the fixed price of $40 to $50, if the next government decides to lower it, what will I do?
The free market is always the best solution, and if you want to control the market, you’re going against all the antitrust laws that the Europeans themselves tried to impose on sellers and buyers, and now they’re doing them the opposite. It is a very hypocritical decision.
Now, to all appearances, Moscow and Doha have already “fed their fill” of the free market and have matured to the point of creating a veritable cartel with Tehran and Ashgabat, which will fiercely defend the interests of non-Western exporters in the gas markets of West and East.
Author: Sergey Marzhetsky
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