Iran offers to build Pars gas pipeline for European market

Iran is proposing to build a US$4 billion (Dh15bn) pipeline to Turkey from its biggest gas field in its quest for a trade route for gas shipments to Europe. If built, the 1,800km Pars Pipeline would have the capacity to transport roughly 3.5 billion cubic feet per day (cfd) of gas from the port city of Assaluyeh on southern Iran's Gulf coast across mountain ranges to the northern city of Bazargan, bordering Turkey.

It would carry gas from the giant South Pars offshore field, which contains an estimated 500 trillion cubic feet of gas, or roughly half of Iran's proved reserves. "Since we perceive Europe's wish to import gas from Iran, we decided that this domestic pipeline will be exclusively for exports," Seyyed Reza Kasaeizadeh, the chief of National Iranian Gas Export Company, told Reuters this week. "Our intention is to get gas to Europe, no matter whether it goes through Nabucco or the Pars pipeline," he said.

Several European countries had expressed interest in investing in the project, Mr Kasaeizadeh said. Iran's Fars news agency reported last week that four companies - two from Iran and one each from Europe and Asia - were bidding on a contract for the Pars pipeline project under terms that would allow the winning bidder, possibly a partnership between an Iranian and a foreign company, to own and operate the pipeline.

From Turkey, the gas would be pumped on to Italy, Austria and Switzerland. Possessing the world's second-biggest gas reserves after Russia's, but with negligible net gas exports, Iran is keen to develop its gas export potential. Iranian officials previously suggested it could supply the stalled Nabucco pipeline project, conceived to move gas from Central Asia to Europe. Analysts have suggested Iran could face problems supplying gas to Europe by either route, because EU countries would be reluctant to back such deals while US-led sanctions remained in force against Iran over its nuclear programme.

The US fears Iran is developing nuclear weapons, an allegation Tehran vigorously denies. A number of big European oil companies that were partners in various South Pars gas development phases have suspended investment in Iran. Tehran has nonetheless pressed ahead with South Pars development in partnership with Russian, Turkish and Asian firms It also has a contract to supply gas to Switzerland, which is not an EU member.

Iran would not necessarily have to sign any direct deals with EU countries to get its gas to Europe at large. Allowing Turkey, a key political ally, to take ownership of the gas exports at its border might suffice. Turkey has applied for EU membership, but has argued that its need for imported energy supplies, from Iran among other sources, must trump its diplomatic relations with the West. For its part, the EU has been trying to diversify its gas supplies, a large portion of which are under Russian control. One undeniable consequence of the sanctions against Iran is that they have slowed the country's plans to develop facilities for cooling and liquefying natural gas for export by tankers.

But on Sunday, an Iranian official said the country had shifted its focus to exporting gas by pipeline. Iran also announced a deal this week to transport gas to Omani gas liquefaction facilities via a proposed undersea pipeline. A pipeline from Assaluyeh in southern Iran to India is also among the projects Iran is pursuing. But that pipeline would have to traverse politically unstable Pakistani-Afghan border territory, exposing it to a high risk of sabotage. Most analysts doubt it will be built.

That could make the prospects of gas exports to Europe all the more appealing to Tehran, despite its deep political differences with the EU. Iran last year produced nearly four trillion cubic feet of gas from 982 trillion cubic feet of reserves. It consumed 3.9 trillion cubic feet of gas domestically. @Email:tcarlisle@thenational.ae