The signing of a memorandum of understanding (MoU) last week between Russian state gas giant Gazprom and the Iranian National Gas Company (NIGC) to begin direct transfers of gas from Russia to Iran “will act as a revolution in the energy and industry scene of the region”, according to Iran’s Petroleum Minister, Javad Owji. Indeed, this MoU and the others that preceded it can be seen as a major stepping stone to enabling the two countries to implement their long-held plan to be the core participants in a global cartel for gas suppliers in the same mold as the Organization of the Petroleum Exporting Countries (OPEC) for oil suppliers.This new MoU between Russian and Iran builds on the solid foundation of the Gulf Exporting Countries Forum (GECF), which on 23
December 2008 at the 7th Ministerial Meeting in Moscow officially moved from being a broadly loose alliance of several leading gas-producing countries into a formal organisation headquartered in Doha, Qatar. Aside from the core members of Russia, Iran, and Qatar, the GECF’s 11 other members comprise Algeria, Bolivia, Egypt, Equatorial Guinea, Libya, Nigeria, Trinidad and Tobago, and Venezuela. Together, Russia, Iran, and Qatar account for just under 60 percent of the world’s gas reserves, with Russia occupying the number one spot globally – with around 1,688 trillion cubic feet (tcf) of gas – and Iran the number two position (with about 1,200 tcf). The GECF as a whole controls about 71 percent of global gas supplies, 44 percent of its marketed production, 53 percent of its gas pipelines, and 57 percent of its liquefied natural gas (LNG) exports.
The Russia-Iran alliance, as evidenced in the most recent MoU between Gazprom and the NIOC and in the earlier 2022 agreement between the two firms, aims to control as much of the two key elements in the global supply matrix – gas supplied over land via pipelines and gas supplied via ships in LNG form – as possible, as analysed in full in my latest book on the new global oil market order. According to a statement from Hamid Hosseini, chairman of Iran’s Oil, Gas and Petrochemical Products Exporters’ Union, in Tehran, just after the 2022 Gazprom-NIOC MoU had been signed: “Now the Russians have come to the conclusion that the consumption of gas in the world will increase and the tendency towards consumption of LNG has increased and they alone are not able to meet the world’s demand, so there is no room left for gas competition [between Russia and Iran].” He added: “The winner of the Russia-Ukraine war is the United States, and it will capture the European market, so if Iran and Russia can reduce the influence of the United States in the oil, gas and product markets by working together, it will benefit both countries.”
These two key elements find their practical application in the four projects contained in the 2022 MoU that are geared towards the further build-out of a ‘Gas OPEC’. One is Gazprom’s assistance to the NIOC in the US$10 billion development of the Kish and North Pars gas fields with a view to the two fields producing more than 10 million metric cubic metres (mcm) of gas per day. The second is the Russian gas giant’s support in the US$15 billion initiative to increase pressure in the supergiant South Pars gas field on the maritime border between Iran and Qatar. The third is Gazprom’s help in completing several LNG projects (including in North Pars and later in South Pars) and the construction of gas export pipelines. The transfers of gas from Russia into Iran’s vast network of pipelines is a vital early stage in this project. And the fourth project is Russia’s ongoing attempts to encourage other major gas powers in the Middle East to join in the gradual roll-out of the ‘Gas OPEC’ cartel. “Gas is widely seen as the optimal product in the global transition from fossil fuels to renewable energy, so controlling as much of it as possible will be the key to energy-based power over the next ten to twenty years, just as it was for Russia in Europe with its gas and oil supplies before the Ukraine invasion,” a senior source who works closely with Iran’s Petroleum Ministry exclusively told OilPrice.com recently.
The start of regular gas transfers from Russia to Iran also neatly links into Tehran’s offer to Moscow on 11 May to establish a broader ‘energy corridor’ from Russia to the Persian Gulf. This, in turn, dovetails into the thrust of Turkey’s announcement on 12 May that it is interested in buying more gas and oil from Iran and that the subsequent transit of these resources to eastern Europe through the country is possible. In essence, these twin statements mean two things. First, Russia would be able to bypass many current international restrictions using Iran’s long-established mechanisms to avoid sanctions on gas and oil flows – both into Turkey and then southern and eastern Europe, and via Iraq into the rest of the world, as also analysed in full in my latest book on the global oil markets. And second, Iran would be able to expedite the progress of its long-sought ‘land bridge’ from Tehran to the Mediterranean Sea by which it could exponentially increase the scale and scope of weapons delivery into southern Lebanon and the Golan Heights area of Syria to be used against Israel and the U.S. in Middle Eastern conflicts. For China, such a broader conflict in tandem with Russia’s current (or next) conflict in eastern Europe, would make it more difficult for the U.S. and its NATO allies to react to a simultaneous invasion of Taiwan.
The build-out of this network of new transport corridors from Russia to Iran and then on to either Turkey or the Mediterranean ports of Syria – via Iraq – also fit well into China’s ongoing plans for its multi-generational power-grab ‘Belt and Road Initiative’ (BRI). June saw high-level meetings between senior Iraqi and Chinese officials to finalise the details of the next phase of their wide-ranging cooperation plan. The foundations for this were laid in the 2019 ‘Oil for Reconstruction and Investment’ agreement, which was subsequently expanded into the 2021 ‘Iraq-China Framework Agreement’. The agreements initially focus on developing oil and gas reserves, and then building out from this to encompass road, rail, air, and shipping links, and then a rapid expansion of cooperation in security matters across the countries. The very recent meetings between senior Iraq and Chinese figures touched again on the first and second of these relationship development phases but focused most on plans to link Iraq’s US$17 billion Strategic Development Road (SDR) program directly into China’s own BRI project. The SDR will create a transport corridor running from the flagship deepwater Al Faw Grand Port (due to be finished in 2025) in its key oil export hub of Basra in the Persian Gulf, all the way through several of its biggest oil and gas fields, and finally into Fishkabur on the Iraqi border with Turkey. From there it will extend via road and railway links into the rest of Europe. The building of this dense network of transport routes from Russia to Iran to Iraq and then on to either Turkey or Syria will also allow Beijing and Moscow to further build up their military and intelligence presence in these countries under the official justification of ‘security personnel’. It is entirely permissible under international law for oil and gas companies to station as many of their own personnel on the ground in any oil and gas field in which they have a significant interest in order to ensure their safety.
Source: oilprice.com