Monday, June 19, 2006

Iran Offers Russia Cooperation in Gas Sphere

Mos News:
Following the recent summit of Shanghai Cooperation Organization Iranian President Mahmoud Ahmadinejad suggested holding the next conference of SCO energy ministers in Iran. Ahmadinejad said that “Iran offers specific measures for cooperation in energy sphere, in exploration and extraction and joint operation of resources”. Moreover, the Iranian President speculated that Moscow and Teheran could “cooperate closely” in determining the price of gas. READ MORE

Iran has the world’s second largest natural gas resources, with Russia accounting for 27 percent of global reserves and Iran — for 15 percent. The news that Iran has no plans to provide tough competition to Moscow in gas sphere won’t make the Europeans, who are seeking to diversify their gas supplies, happy. European politicians have already expressed concern about close cooperation in gas sphere between Russia and Algeria, which is currently the second largest gas supplier to the European market. The new agreement between Russia and Iran is likely to deal a serious blow to diversification efforts.

Russian President Vladimir Putin explained that the two countries will establish a joint venture “on the basis of both countries’ resource deposit. The joint venture would also be occupied with “creation of the relevant mechanism of price-formation for natural gas”. “We will think, which deposits to offer [for the JV],” the Russian President said, quoted by Vremya novostej daily. Putin also told reporters that Teheran is offering Gazprom to take part in construction of the gas pipeline Iran-Pakistan-India. There is also a possibility that the pipeline will then be extended to China. This will allow sending the bulk of Iranian gas eastward and delaying its appearance on the European market.

Gazprom’s press secretary Sergei Kupriyanov confirmed that the Russian gas monopoly is holding negotiations with Iranian National Gas Company regarding establishment of the joint venture.