Iran: Europe gas pipeline not a priority

A senior energy official says Iran has removed the idea of pipeline transport of gas to Europe from its priorities because of its waning economic value. 

“Given the gas price decline in Europe, the economic viability of the project has probably decreased. Besides, the market share of single shipments and LNG has grown,” CEO of the National Iranian Oil Company Rokneddin Javadi said in Tehran on Thursday.

“No doubt, the economic value of the project for gas exports to Europe has weakened and been removed from priority, but no negotiation has been cancelled out yet,” he said.

Meanwhile, Minister of Petroleum Bijan Zanganeh said Iran prefers to transfer its gas to Europe in LNG form.

“The gas price in Europe has made infrastructural projects such as pipelines not economically viable,” he told an energy security summit in Berlin.

“I do not consider building a pipeline out of question but there are many problems involved and this is not our prime option,” Zangeneh added.

The surprise remarks came after another official said Iran was weighing whether to join a major pipeline for transfer of Caspian gas to Europe.

The country is “looking into the possibility of buying equity” in the Trans Anatolian Pipeline (TANAP) which is projected to hook up Azerbaijan’s gas to European markets, Iran’s Ambassador to Baku Mohsen Pakayin has said.

The pipeline will pump gas from the Shah Deniz 2 field in the Caspian Sea to Turkey and from there to Europe for a length of 1,850 kilometers.

Construction work began in March, and the project is expected to come on stream in 2018.

TANAP is part of the Southern Corridor route which the Europeans are promoting for transfer of the Caspian gas.

Presently, Azerbaijan holds 58% of TANAP’s shares. Turkey has a 30% stake and the BP consortium is discussing to acquire a stake.  

Azerbaijan, however, does not have enough gas and the pipeline's promoters have to look for others resources in order to make it viable.  

Azeri officials have indicated their readiness for Iran to join the project which is estimated to cost $10-11 billion.

The Europeans are trying to diversify their sources of energy as tensions rise with Russia which is their biggest supplier of gas.

TANAP will pump gas from the Shah Deniz 2 field in the Caspian Sea to Europe.

EU Energy Commissioner Miguel Arias Canete has said that Europe was keeping the possibility of importing gas from Iran open.

The Europeans are closely watching as Iran and the P3+3 group of countries are working to hammer out a final nuclear agreement which would remove restrictions on trade with Tehran.

Last week, EU’s energy chief said he had discussed the possibility of transiting Turkmenistan’s gas via Iran with the Central Asian state’s leader.

European Commission Vice President Maros Sefcovic said he discussed with Turkmen President Gurbanguly Berdymukhamedov the idea of building a pipeline through Iran to transfer gas to Europe.

Iran sits on the world’s second largest gas reserves, put at 34 trillion cubic meters.

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