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Page added on January 30, 2007

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Energy Jihad

Russia spent last year strenuously denying reports that it was participating in the creation of a cartel of gas suppliers to the EU. Now, however, the idea has received an unexpected boost from Iranian leader Ayatollah Ali Khameni, who called on Russia to create a “gas OPEC” at a recent meeting with Russian Security Council secretary Igor Ivanov. Although a cartel would be unprofitable for Gazprom, an energy union cum geopolitical alliance of Russia, Iran, and Algeria does appear to be in the works.

Ayatollah Khamenei understood the idea of a “gas OPEC” in approximately the same terms as the NATO experts, but with one big difference: he embraced it wholeheartedly. “Our two countries can become mutually supportive partners in the spheres of politics, economics, and regional and international questions,” said the ayatollah, emphasizing the political rather than the economic character of the idea. According to Khamenei, Iran and Russia together control “more than half” of the world’s gas reserves (in fact, the figure is 42%), meaning that such a partnership makes perfect political sense.
Clearly, Gazprom still has hopes of gaining access to the export of Iranian energy resources by entering into a partnership with Iran, but for that to happen, Iran would have to amend its laws to give the Russian gas giant the access it has demanded to Iran’s gas export market.

Moreover, Gazprom and Iran are potential competitors. Iran’s potential as a supplier of gas to the EU will develop fully only after the construction of the Nabucco gas pipeline in 2012 – a project that competes with the Russian pipeline project in southern Europe. With regard to the CIS, all of the countries named in the list of those purported to be contemplating participation in a “gas OPEC” project are either potential or actual competitors for Russia in the US, the EU, and Southeast Asia.

However, no competition between Russia and Iran is expected in the gas market before 2012, and a “gas OPEC” could have excellent potential as a political alliance. The first countries that could be convinced to join such an alliance may be Algeria and Turkmenistan, especially since Iran is known to have its eye on Turkmenistan as a potential source of gas (the country currently supplies around 5 billion cubic meters of gas annually to Iran) and Russia buys up the remainder of Turkmenistan’s gas.


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