Page 1 of
2 Energized Iran builds more
bridges By M K Bhadrakumar
The spin could be given that at its latest
meeting in London on Friday, the "Iran Six" - the
five permanent members of the United Security
Council and Germany - in grappling with the Iran
nuclear problem, advanced in unison the demand for
the cessation of uranium-enrichment activities by
Tehran. But this would be an untruth. The reality
is that the "Iran Six" process looks tired and
repetitive. The reality is also that the "Iran
Six" is "to try to lure Iran into nuke talks", as
the Associated Press reported. The six's other
members are the United States, Britain, France,
Russia and China.
British Foreign
Secretary David Miliband said the proposal to
offer Iran incentives to stop its enrichment
program is designed to show Tehran "the benefits
of cooperating with the international
community". But even as
the proposal is yet to be conveyed to Tehran, the
Iranian side dictated its contents. Foreign
Minister Manouchehr Mottaki said in Tehran on
Saturday: "At [our] recent meeting in Kuwait with
Foreign Secretary David Miliband, he told me the
Iran Six intends to send us a letter after the May
2 London meeting. I told him in response: 'You
know very well which word is forbidden in Iran. Be
careful in your proposals to avoid crossing the
forbidden line'."
It is obvious Iran's
hectic diplomatic activity has put the "Iran Six"
on the defensive. Tehran's nuclear standoff with
the West is fast losing momentum. As Moscow expert
Igor Tomberg of the elite Institute of World
Economy and International Relations put it, at the
back of it all lies the realization that "Iran has
added energy to the quiver of its military and
political arrows. Its advance to the global gas
market could disrupt the current balance of
interests there."
Switzerland leads the
way If a marker is to be put down, the
turning point came on March 17 when Iran and
Switzerland signed a 25-year gas deal. According
to the Swiss government, the deal between
Elektrizitats-Gesselschaft Laufenburg and the
National Iranian Gas Export Company is worth US$42
billion. It is the first of its kind in the recent
past in which a European energy company has
actually signed a firm contract with Iran. So far,
the practice has been to sign non-binding
memorandum of understandings (MoUs).
In
terms of the agreement with Switzerland, Iran will
deliver 5.5 billion cubic meters (bmc) of gas per
year to Europe, starting from 2010 via a pipeline
under construction. That the deal signified a
watershed in the geopolitics of energy security
was apparent from the presence of Mottaki and
visiting Swiss Foreign Minister Micheline
Calmy-Rey at the signing ceremony in Tehran.
Indeed, Calmy-Rey acknowledged that Switzerland
has a "strategic interest to secure our gas
supplies and diversify our gas suppliers". She
pointed out that the gas deal with Iran would
reduce Europe's dependence on energy supplies from
Russia. "We are decreasing our dependence, and the
dependence of Europe, on Russian gas," she
stressed in Mottaki's presence.
Washington
is likely angry. The Financial Times of London
reported Washington hinted at terminating the
arrangement of the US Interest Sections being
located in the Swiss embassies in Tehran and
Havana. But Swiss officials maintained no
international sanctions prevented foreign
investment in the Iranian energy sector and that
the March 17 gas deal, in fact, was intended to
"alleviate" energy shortages in Italy. Looking
ahead, the Financial Times added, "Following the
[Swiss-Iranian] deal, some European leaders have
voiced concern about new investment in liquefied
natural gas (LNG), the sector in which groups such
as Total, Royal Dutch Shell and Austria's OMV have
struck preliminary agreements [with Iran] but have
yet to sign formal contracts. Iran has warned such
companies they need to conclude deals by June or
it will look elsewhere for investment."
Iran's Swiss deal has alerted world
capitals. China has speeded up negotiations over
its $16 billion gas deal over Iran's North Pars
gas field. China's National Offshore Oil
Corporation (CNOOC) signed a memorandum last year
to expand the gas reserves of the North Pars field
and also purchase LNG from the output for a
25-year period, but was holding back from signing
a contract, given the US-Iran nuclear standoff.
It will be China's second big energy deal,
with the Chinese oil refinery Sinopec having
signed in early March a $2 billion deal to develop
Iran's Yadavaran oil field. Defending the CNOOC,
Foreign Ministry spokesman Liu Jianchao said in
Beijing recently, "Cooperation between CNOOC and
Iran is a business act between enterprises. We
believe that the actions to address this [nuclear]
problem should not undermine normal trade and
economic cooperation with Iran."
India,
too, has begun underscoring that the
Iran-Pakistan-Iran gas pipeline project is
"doable". In comparison with China, though,
India's decision-making is haphazard. A powerful
pro-US lobby also weighs against India dealing
with the Iranian regime. The Indian government
couldn't take optimal advantage of the recent
stopover in New Delhi by Iranian President Mahmud
Ahmadinejad. The Iranian media reported
Ahmadinejad did not make any commitments to the
Indian side on the pending $25.6 billion LNG deal
that India has been negotiating for almost eight
years or on the gas pipeline deal.
According to the official Iranian news
agency, "With the Indo-US nuclear deal slipping
into limbo, the Manmohan Singh government [in
Delhi] has shrewdly sensed the importance of
reaffirming its ties with Iran, both as a
placatory gesture towards its leftist allies
opposing the nuclear deal and as a pragmatic
alternative source of energy for the country's
growing economy."
Russia's grandiose
plans Tehran is unlikely to be in a hurry
to respond until the European energy companies'
June deadline passes. The Iranians have multiple
choices from the East and West. Principal among
them is Russia's Gazprom. To be sure, Moscow has
speeded up its energy dialogue with Iran in recent
weeks. On April 23, the Iranian government and
Gazprom signed a memorandum of understanding "to
cooperate in the development of oil and gas
fields, as well as investment and exploratory
studies".
Gazprom's bid is to secure the
rights to develop several sites at Iran's South
Pars gas field in the Persian Gulf and the North
Azadegan oil deposit in southern Iran. Gazprom is
already participating in the development of the
South Pars' second and third stages jointly with
France's TotalElf and Malaysia's Petronas. The
project is operating in design mode to produce and
process 20 bcm of gas annually. South Pars holds
60% of Iran's gas reserves, equivalent to 10% of
the known global gas reserves. It forms part of
the North Dome deposit, which is regarded as the
world's largest non-associated gas field, located
partly in Iran and partly in Qatar.
Moscow
is playing for high stakes. On April 24, the day
after Gazprom signed the MoU with Iran, its chief
executive officer, Alexei Miller, traveled to
Berlin for a "working meeting" with a dignitary
who was visiting Germany - Qatari Prime Minister
Sheikh Hamad bin Jassim bin Jabir al-Thani. A
Gazprom press release said, "The two sides
discussed the possibilities for Gazprom and Qatar
Petroleum to implement joint investment projects."
Qatar holds the world's third-largest gas reserves
after Russia and Iran. The three countries
together hold about 55% of the world's total gas
reserves. The implications of the
Russian-Iranian-Qatari collaboration are profound,
to say the least.
It was against this
background that Russia and Iran held consultations
in Tehran within the framework of the Gas
Producing Countries' forum on April 28. The
consultations related primarily to finalization of
a charter for forming a cartel of gas producing
countries. On the same day, the acting head of
Russia's National Security Council, Valentin
Sobolev, also arrived in Tehran on a three-day
visit for wide-ranging talks on bilateral
relations.
Head
Office: Unit B, 16/F, Li Dong Building, No. 9 Li Yuen Street East,
Central, Hong Kong Thailand Bureau:
11/13 Petchkasem Road, Hua Hin, Prachuab Kirikhan, Thailand 77110
