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Central Asia: Iran's Energy Plans Could Aid Exports

London, 11 November 1997 (RFE/RL) -- Energy analysts say Central Asian nations will benefit if Iran succeeds in developing further develop its oil and gas sector because the countries of Central Asia would gain access for their fuel exports to Iran's pipelines and seaports.

But Iran's government says U.S. sanctions are holding up the expansion of both Iranian and Central Asian energy sectors.

Iran is considering several major projects including the expansion of port facilities and construction of pipelines in order to engage in oil swap arrangements with Azerbaijan, Turkmenistan and Kazakhstan, as well as pipelines to Armenia and Nakhjavan.

Iran plans also to expand its gas pipeline network, already connected to Azerbaijan and Turkmenistan, to Armenia and Turkey, as the first stage of a huge gas transmission network between Turkmenistan, Iran and Turkey. Eventually, it is planned this network will supply Turkey with gas from Iran and Turkmenistan.

The $1.6 billion Turkmenistan-Turkey pipeline, said to be Iran's biggest international energy project since the 1979 revolution, will run 3,200 km on the eastern side of the Caspian Sea.

Such an expansion would add to the strategic importance of Iran, the only country bordering the world's two most crucial sources of oil and gas, the Persian Gulf and the Caspian Sea, and itself the possessor of 10 percent of world oil reserves and 15 percent of gas reserves.

Iran also offers the landlocked Central Asians the potential of reaching world markets for their energy exports via its pipelines and ports. As one analyst says: "The riches of the Caspian Basin need an outlet to the open seas...The countries around the Caspian Sea do not have many alternative land routes except those through Iran."

A senior Iranian official, Javad Yarjani, an adviser to the National Iranian Oil Company, said in London last week that Iran is the logical route for the transfer of oil and gas from the Caspian Sea to Europe, and to the rapidly modernizing Asian countries..

He said one example of Iran's growing cooperation with the Central Asians is an oil swap with Kazakhstan in which Kazakh oil is to be processed in oil refineries in northern Iran.

However, Yarjani said there has been what he called a concerted effort by the U.S. Congress to stop the development of Iran's oil and gas reserves. The Congress, in his words, "has gone to extraordinary lengths" to achieve this objective by imposing extra-territorial sanctions on third countries' (oil and gas) companies.

He called the sanctions illegal under international law and said they threaten the sovereignty of other countries, the future development of Central Asia and the future stability of international energy supplies.

The U.S. Iran-Libya Sanctions Act passed by Congress in 1996 requires President Clinton to impose sanctions on any foreign company investing more than $20 million a year in either of the countries' energy industries. The United States has charged that Iran supports international terrorism, is pursuing weapons of mass destruction, and has undermined the Middle East peace process.

In his remarks, Yarjani said a $2 billion deal by French, Russian and Malaysian firms in September to develop Iran's South Pars gas field in the Persian Gulf has shown what he called the "determination of the rest of the world to defy the U.S. Congress's illegal attempts to interfere in the free operation of international markets."

The U.S. State Department responded, in the words of a statement it issued on the contract, "such investments make more resources available for Iran to use in supporting terrorism and pursuing missiles and nuclear weapons."

But analysts say the solidarity of EU governments, Japan, Canada and Australia, among others, against any extra-territorial imposition of sanctions will make it difficult for Clinton to take effective action.

As for other Iranian oil and gas expansion plans directly affecting Central Asia, Teheran needs billions of dollars of foreign investment to make them a reality. Although Russia and China could meet some of its equipment and capital needs, analysts say Iran would prefer to deal with the west which has ample capital and the best technology.

This means that the expansion of Iran's oil and gas infrastructure -- the pipelines, ports and refineries so potentially vital to the Central Asians -- could hinge on the future course of Iranian relations with the United States and other Western countries.