Three Caspian States Pledge Mutual Support
Iran wants to expand energy cooperation with all its neighbours, including Azerbaijan, said its oil minister, Bijan Namdar Zanganeh, at a summit in Baku August 8. Zanganeh made the remarks during a meeting with Socar’s president, Rovnag Abdullaev, as energy ministers of three Caspian states – the other being Russia – discussed co-operation.
While nothing concrete was announced, the sentiments expressed showed a degree of solidarity that could block the access of other Caspian states to key gas export routes.
During the meeting they discussed mutual interests and the prospects for cooperation, the statement said. Co-operation in the gas sphere, especially the long-discussed possibility for using Socar’s underground gas storage faciliteis for Iranian gas, was discussed during the meeting, Socar sources told NGE.
Socar and Iran rely on swaps to bring gas to the remote Nakhchivan autonomous region: Azerbaijan delivers 1.3mn m³/day to Iran which in turn supplies about 15% less (as transit cost) to Nakhchivan.
Azerbaijan has two underground gas storage sites: Galmaz and Garadag. After the upgrade their total volume went from 3.5bn m³ to 5bn m³.
According to Socar sources, these facilities might be used 'virtually.' "There is no physical means for delivering Iranian gas and pumping it into UGS near Baku. But we can pump our additional gas into storage and supply it to Iran’s northern region during winter, when they experience gas shortages,” they said. Iran will supply the same amount of gas to the southern regions of Azerbaijan in summer and Nakhchivan. There are other options too, said the sources adding that the final decision yet has to be made.
Iran officials earlier also confirmed that the discussions of how to store Iran’s gas in Azerbaijan’s UGS are under way.
Russia is also proposing a gas exchange with Iran using Azerbaijan’s UGS, according to Russian energy minister Alexander Novak. He said Iran normally supplies gas to its northern regions from the south of the country and the proposed swap deals would help to cut its transportation costs.
"In the gas industry, we now consider promising swap gas supplies to northern Iran via Azerbaijan with the possibility of building a liquefaction plant in southern Iran in order to receive enough LNG for sale to markets in southeast Asia," Novak told reporters in Baku August 8. "We have long relationships in energy cooperation with Baku and Tehran on a bilateral basis," Novak added. "All three countries are leading oil and gas exporter countries, have significant hydrocarbon reserves, so there is great potential to integrate and synchronise our efforts and gain synergy effects," he said.
The presidents of Azerbaijan, Russia and Iran – Ilham Aliyev, Vladimir Putin and Hassan Rouhani – signed a joint declaration in which as well as joint efforts to work for regional stability, they affirmed their countries` commitment to expanding cooperation in gas production, supply and transport.
It also said that the greater use of natural gas, as a cost-effective and environmentally friendly fuel, would greatly improve the environment, as well as facilitate the Paris agreement to reduce greenhouse gas emissions.
Some analysts see possibilities for setting up a gas cartel between Russia, Azerbaijan and Iran. A research fellow at the Institute of Oriental Studies, Russian Academy of Sciences, Stanislav Pritchin said that three countries “could defend their gas export interests together.”
Russia is already a major gas supplier for Europe; Azerbaijan is working towards that and Iran could become one in near future, he said. “If they compete with each other, Brussels will strengthen its position, and Moscow, Baku and Tehran will suffer financial losses. All parties will benefit if they have a common approach to the construction of gas pipelines, as well as an agreed policy on excessive competition in the southern markets of EU," Pritchin said.
Kama Mustafayeva