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Ukraine: Talks Continue With Iran On Gas Pipeline For Europe

Iran and Ukraine continued talks this week on a proposal to build a gas pipeline to Europe. But the plan faces numerous hurdles, including the need to cross Russian territory and Ukraine's bad record of diverting transit gas.

Boston, 8 February 2001 (RFE/RL) -- There seem to be huge hopes but little logic behind this week's talks between Iran and Ukraine on building a gas pipeline to Europe.

On Tuesday, Ukrainian Prime Minister Viktor Yushchenko visited Tehran for a series of meetings that included discussions of the pipeline idea. Iranian President Mohammed Khatami praised the proposal, saying that a pipeline to Europe through Ukraine for Iranian gas could "play an effective role in establishment of security and stability in the region," the official news agency IRNA reported.

First Vice President Hassan Habibi also praised the pipeline plan, saying that Ukraine would be an "appropriate route" for Iranian gas and that Tehran was interested in pursuing it.

The idea appears to have been raised unexpectedly by President Leonid Kuchma during Iranian Foreign Minister Kamal Kharrazi's visit to Kyiv last week. Ukrainian Foreign Minister Anatoliy Zlenko said, "It's the first time we have broached the subject. We'll be entering negotiations soon with the European Union." Kharrazi responded that a joint working group would be formed to study the plan, according to Agence France Presse.

Kharrazi's trip was aimed at expanding trade ties and preparing for this week's maiden flight of Iran's first passenger plane, which was built in a joint venture with Ukraine.

But the pipeline idea has struck a chord in both countries, leading to enthusiastic statements about the gas plan. Iran has long hoped to find an export route for gas sales to Europe, while Ukraine has searched anxiously for sources other than Russia, which it owes over $1.4 billion for gas.

On the surface, Iran and Ukraine are well-matched to develop an export project. Iran has the world's second-largest gas reserves with about 14 percent of the world's total. Much remains to be developed. Despite its resources, the country accounts for only about 2 percent of the world's gas production. But many new discoveries may make Iran an important supplier in the future.

On the other side, Ukraine is the world's sixth-largest consumer of gas. Last year, the country used over 73 billion cubic meters of the fuel, while it produced only 18 billion cubic meters of its own. Ukraine relies on Russia or Russian pipelines for all of its gas imports. It also occupies a strategic position as a transit country to Europe. Ukraine handled a total of nearly 180 billion cubic meters of gas last year. In addition, the country is a major producer of steel pipes.

It is not surprising, then, that Iran and Ukraine would combine their hopes and ambitions. The problem is that so many obstacles stand in the way of a pipeline plan.

Any practical route for an Iranian pipeline to Ukraine would have to cross Russian territory, raising the question of why Moscow would want to help a competitor for its own gas exports to Europe.

In order to bypass Russia, Iran would have to extend its planned gas route to Armenia through Georgia and across the Black Sea. Such a line would require enormous amounts of investment. Even if financial backers could be found, they would probably be wary of a route through Ukraine, given its history of running up debts and diverting Russian gas.

In the coming decades, Iran's gas seems certain to play a major role in world energy exports. The country has more than 20 trillion cubic meters of gas in reserves, including more than 12 trillion cubic meters in its giant South Pars gas field in the Persian Gulf alone. Last year, Iran found two new onshore fields containing at least 500 billion cubic meters more.

The question is why Iran would try to route its gas through Ukraine, even if it could. Starting in July, Iran plans to start pumping gas across the Turkish border through a line that it has already built. Although some analysts are concerned that Ankara may try to put off its purchases of Iranian gas for a second time, the line seems far more likely to form the basis for a future route to Europe than any plan involving Ukraine.

Turkey's over-commitments to buy gas from Russia and at least five other countries may hasten plans to build new links through Turkey to Europe, perhaps giving Iran the western outlet it seeks.

In the meantime, the talks between Iran and Ukraine may be a sign of how much each country wants a solution to its gas problems. But it is doubtful that Iran and Ukraine can solve their problems for each other.