Accessibility links

Breaking News

Qishloq Ovozi

A gas refinery worker in Khorasan Razavi province, Semnan, Iran

Russia, beware, Iran is trying to get into the European gas market.

In recent months, Iranian officials have been signaling to potential customers in Europe, potential suppliers in the Caspian Basin, and transit country Turkey that Iran is not only ready to get into the game but that without Iranian participation the European Union's Southern Gas Corridor will take many years to realize, or might never be realized.

Of course, the Southern Gas Corridor is all about decreasing Russian gas exports to Europe, an increasingly important issue for European governments as ties with the Kremlin continue to deteriorate over events in Ukraine.

A quick look at a map shows why Iran, with the second-largest gas reserves in the world, is well-placed to sell gas to Europe and also link gas-rich countries in the Caspian Basin region to Europe.

International sanctions imposed on Iran over that country's opaque nuclear program have constricted Iran's ability to sell its gas and oil on world markets or to participate in multinational pipeline projects.

The latest round of talks between Iran and the world powers (UN permanent Security Council members Britain, China, France, Russia, and the United States, plus Germany) seem to have already convinced Tehran that the time is approaching when sanctions will ease sufficiently and Iranian gas and oil will be available to world markets.

But that will be a complicated process, and there are already some who feel Tehran is overestimating its potential.

Iran has been dropping hints about its readiness to enter the EU's planned gas corridor for many months. But in August Tehran sent a message straight to the heart of Europe when a top official spoke of resurrecting the Nabucco gas-pipeline project: Iranian Deputy Oil Minister Ali Majedi announced that his country was ready to supply gas to Europe through Nabucco.

The Nabucco project was shelved after Azerbaijan chose in June 2013 to ship its gas via the Trans-Adriatic Pipeline (TAP). Nabucco was aimed at bringing some 31 billion cubic meters (bcm) of gas to Baumgarten, Austria, (and was included as part of the Southern Gas Corridor) but faced problems convincing potential suppliers to sign contracts.

Majedi stated that Iran was prepared to sign on as a supplier and added that "two visiting European delegations" had discussed potential routes to bring Iranian gas to Europe. He claimed the country that was closest to signing a deal with Nabucco -- that is, Azerbaijan -- has insufficient reserves of gas to fill the pipeline.

Reporting on Majedi’s comments, Iran's IRNA news agency said, "Azeri offshore Caspian Shah Deniz II production...is estimated at not more than 8 bcm per year.* Therefore, even if Azerbaijan's gas ends up supplying the Nabucco gas pipeline, there would still be a deficit of 23 bcm of gas per year for the pipeline."

Iranian President Hassan Rohani brought the offer up in a meeting with Austrian counterpart Heinz Fischer in September on the sidelines of the UN General Assembly. Rohani told Fischer that "the Islamic Republic can be a reliable supplier of energy for Europe" and mentioned the Nabucco pipeline.

Rohani knew his audience, since the multibillion-dollar Nabucco project was spearheaded by Austria's OMV.

At the start of February, Azizullah Ramazani, the director of National Iranian Gas Company's department for international relations, said European countries would not import Iranian gas for "political reasons."

So he offered something different.

"Our proposal -- is getting Turkmen and Azeri gas to Iran, and then its transit to Europe via Turkey, because this route is the most economical way to transfer gas to Europe," Ramazani explained. And he specifically mentioned the rival route -- the Trans-Caspian pipeline project -- as being "expensive and impractical."

The Trans-Caspian gas pipeline idea dates back to the mid-1990s and foresees shipping Turkmen gas via an underwater pipeline across the Caspian seabed to Azerbaijan, where it would be loaded into pipelines headed further west. The project has been opposed by fellow Caspian littoral states Russia...and, notably, Iran.

Turkey is the key country for bringing Azerbaijani, Iranian, or Turkmen gas to Europe. Azerbaijan and Turkey are working to construct the Trans-Anatolian Pipeline (TANAP). Once finished, TANAP would carry some 16 bcm, of which 6 bcm would go to Turkey and 10 bcm to TAP.

The original Nabucco project also envisaged a pipeline running from the Georgian and/or Iranian border, through Turkey and into Europe.

Iran already has a pipeline to Turkey that supplies some 10 bcm annually.

Of course, for the Southern Gas Corridor to seriously affect Europe's Russian gas imports would require the construction of multiple pipelines from the Caspian Basin and Iran.

Russia supplied Europe with some 155 bcm of gas in 2014. (Remember, TAP is only bringing 10 bcm.)

Iran, according to the BP Statistical Review of World Energy June 2014, has some 33.8 trillion cubic meters, while Turkmenistan has the world's fourth-largest reserves with some 17.5 trillion cubic meters.

According to the U.S. Energy Information Administration, Russia has the world's largest gas reserves with some 48.7 trillion cubic meters (tcm), though the BP report puts it far lower at 31.3 tcm. In either case, Iran and Turkmenistan together have more gas than Russia. Azerbaijan has 1 tcm also.

But Tehran and Moscow have been allies lately. Iran selling its gas, or allowing transit of Azeri and Turkmen gas to Europe, certainly hurts Gazprom's sales and, by extension, the Russian state budget. So Iran risks its good relations with Russia if it goes ahead with plans for gas exports to Europe.

There are also questions about Iran's infrastructure. The director of the Azerbaijan Center for Oil Studies, Ilham Shaban, wrote in early February that "there is not any existing infrastructure inside Iran that would allow the transfer of Turkmen gas to Turkey’s borders." Shaban noted that Iran was building gas pipelines leading from the south to the north of the country but said that "there is not a pipeline to connect Iran's north-east (Turkmenistan) to north-west (Turkey)," and concluded, "It appears given the current situation, Iran is not in any near-term position to route Caspian gas towards Europe."

*Shah Deniz 1 produces some 9 bcm annually and the Shah Deniz 2 project aims to boost production by some 16 bcm

-- Bruce Pannier

Uzbek President Islam Karimov

This was the headline from a report the Fergananews.com website carried at the end of December about the March 29 Uzbek presidential election.

“Incumbent President Islam Karimov’s Reelection Scheduled For March 2015"

It is a reliable prediction since, barring an act of God, Karimov is certain to be elected for the fourth time, or put another way, for his second unconstitutional term in office (see Article 90 of Uzbekistan’s constitution).

Karimov has been the poster boy for “Central Asia’s strongmen” for more than two decades and during that time earned a reputation as a rights abuser, an enemy of the press, and a neighborhood bully.

But he recently turned 77. He has been the subject of health rumors for some time now -- and lately those rumors have gathered more steam. Well-publicized family problems, which include his eldest daughter currently being under house arrest, have caused Karimov some embarrassment and raised questions about his control over his inner circle.

His country seems headed for some tough economic times, as migrant laborers in Russia return to unemployment in Uzbekistan and a large part of the remittances they’ve been sending home ($6.6 billion in 2013) evaporate. There are also fresh security concerns now that Afghan troops are fully responsible for security in their country, including the area bordering Uzbekistan.

And there is the huge matter of leadership succession in Central Asia’s most populous country.

RFE/RL’s Turkmen Service, known locally as Azatlyk, organized a roundtable on the challenges during Karimov’s upcoming five-year term.

Azatlyk Director Muhammad Tahir moderated the discussion with Sanjar Umarov, leader-in-exile of Uzbekistan’s opposition Sunshine Coalition; Joanna Lillis from EurasiaNet and author of many articles about Uzbekistan; Alisher Sidikov, the director of RFE/RL’s Uzbek Service, known locally as Ozodlik; and myself.

Figures from international financial organizations such as the International Monetary Fund and World Bank show Uzbekistan weathered the recent global economic crisis fairly well with GDP growth of more than 8 percent or more annually for several straight years. But Russia’s sharp economic decline is likely to hit Uzbekistan’s economy hard.

Sidikov said the economy would be a major challenge for Karimov during his next term as work becomes harder to find in Russia, remittances dry up, and hundreds of thousands of Uzbek citizens return home.Finding jobs for them will be difficult and if they remain unemployed there could be social unrest.

Uzbekistan can still count on Chinese investment but Russia is currently not in a position to sink money into Uzbekistan, a fact underscored by Moscow’s recent decision to greatly reduce imports of Central Asian gas. Until very recently, most of Uzbekistan’s exported gas went to Russia. China is building four gas pipelines to Central Asia but it is still several years until all those pipelines are finished.

Lillis pointed out “Western investors shun the country, not really so much because of political uncertainty although that is a factor, but mainly because many Western investors have had terrible experiences in Uzbekistan [some] had their businesses appropriated.”

Karimov is unlikely to have the luxury of devoting his full attention to looming economic problems.

The panelists agreed the biggest question hanging over Karimov’s next term in office is whether he’ll live through all five years and that opened the door for a discussion on succession.

Sidikov said that while deciding the succession question should be one Karimov’s priorities during the next term, the Uzbek president might spend more time ensuring an exit strategy for some of his family members after his death. Sidikov said the process has already started. “They [the Karimov family] don’t invest in their future in Uzbekistan, they don’t see themselves in Uzbekistan long term…they don’t have a long-term perspective for their stay.”

There is no member of the Karimov family who is a legitimate contender to take over once President Karimov dies. That leaves someone from the inner circle.

There has been a struggle for positioning at the top levels of the Uzbek government for years now. But it’s become more intense in the last year, since the downfall of Gulnara Karimova, the would-be socialite, musician, politician, and presidential daughter. This spectacular fall from grace of not just Gulnara but many of her associates was clearly orchestrated by someone within the Uzbek government.

Lillis said during Karimov’s next presidential term “the question of political stability is going to come to the fore much more…there's going to be a lot of questions about the unresolved succession and I think that we're going to see a lot of behind the scenes, or possibly public infighting.”

The head of Uzbekistan’s National Security Service (SNB), Rustam Inoyatov, is suspected of masterminding Gulnara’s downfall. He is also mentioned as one of the likely successors to Karimov. The fact that Inoyatov, 70, has been the SNB chief for 20 years speaks volumes about the power he must have.

Umarov said he did not believe Inoyatov would succeed Karimov, pointing out that in the wake of the Andijon massacre in May 2005, Inoyatov was one of the Uzbek officials hit by the European Union with a travel ban. President Karimov was not put on that list. So Inoyatov’s odious reputation for violating rights complicates his chances for assuming Uzbekistan’s top post.

But it was noted that the SNB will have a large say in who is chosen to be Uzbekistan’s second president.

The panelists covered much more ground during the discussion, which can be heard in its entirety at:

please wait

No media source currently available

0:00 0:30:07 0:00
Direct link

-- Bruce Pannier

Load more

About This Blog

Qishloq Ovozi is a blog by RFE/RL Central Asia specialist Bruce Pannier that aims to look at the events that are shaping Central Asia and its respective countries, connect some of the dots to shed light on why those processes are occurring, and identify the agents of change. Content will draw on the extensive knowledge and contacts of RFE/RL's Central Asian services but also allow scholars in the West, particularly younger scholars who will be tomorrow’s experts on the region, opportunities to share their views on the evolving situation at this Eurasian crossroad. The name means "Village Voice" in Uzbek. But don't be fooled, Qishloq Ovozi is about all of Central Asia.

Subscribe

XS
SM
MD
LG