The US$40 billion memorandum of understanding (MoU) signed last month between Gazprom and the National Iranian Oil Company (NIOC) is a stepping stone to enabling Russia and Iran to implement their long-held plan to be the core participants in a global cartel for gas suppliers in the same mold as the Organization of the Petroleum Exporting Countries (OPEC) for oil suppliers. With a foundation in the current Gas Exporting Countries Forum (GECF), this ‘Gas OPEC’ would allow for the coordination of an extraordinary proportion of the world’s gas reserves and control over gas prices in the coming years. Occupying the number one and number two positions in the world’s largest gas reserves table, respectively – Russia with just under 48 trillion cubic meters (tcm) and Iran with nearly 34 tcm – the two countries are in an ideal position to do this.
The Russia-Iran alliance, as evidenced in the most recent multi-faceted MoU between Gazprom and the NIOC, wants to control as much of the two key elements in the global supply matrix – gas supplied over land via pipelines and gas supplied via ships in liquefied natural gas (LNG) - as possible. According to a statement last week from Hamid Hosseini, chairman of Iran’s Oil, Gas, and Petrochemical Products Exporters’ Union, in Tehran, after the Gazprom-NIOC MoU had been signed: “Now the Russians have come to the conclusion that the consumption of gas in the world will increase and the tendency towards consumption of LNG has increased and they alone are not able to meet the world’s demand, so there is no room left for gas competition [between Russia and Iran].” He added: “The winner of the Russia-Ukraine war is the United States, and it will capture the European market, so if Iran and Russia can reduce the influence of the United States in the oil, gas and product markets by working together, it will benefit both countries.”
The Gazprom-NIOC MoU contains four key elements that are geared towards the build-out of a ‘Gas OPEC’. One element is that the Russian state-backed gas giant has pledged its full assistance to the NIOC in the US$10 billion development of the Kish and North Pars gas fields with a view to the two fields producing more than 10 million cubic meters of gas per day. A second element is that Gazprom will also fully assist with a US$15 billion project to increase pressure in the supergiant South Pars gas field on the maritime border between Iran and Qatar. A third element is that Gazprom will provide full assistance in the completion of various liquefied natural gas (LNG) projects and the construction of gas export pipelines. The fourth element is that Russia will examine all opportunities to encourage other major gas powers in the Middle East to join in the gradual roll-out of the ‘Gas OPEC’ cartel, according to a senior source who works closely with Iran’s Petroleum Ministry. “Gas is widely seen as the optimal product in the transition from fossil fuels to renewable energy, so controlling as much of the global flow of that will be the key to energy-based power over the next ten to twenty years, as has already been seen on a smaller scale in Russia’s hold over Europe through its gas supplies,” he added.
From a top-down perspective, the Russia-Iran alliance is focused on drawing in the overt or covert support for the Gas OPEC construct from other major producers in the Middle East regarded as undecided in committing to the Russia-Iran-China axis or to the U.S.-Europe-Japan axis. Qatar (with the world’s third-largest gas reserves of just under 24 tcm, and the top LNG supplier) has long been seen by Russia and Iran as a prime candidate for such a gas cartel, given that it shares the principal source of its ongoing prosperity with Iran in the shape of the 9,700 square kilometres (sq.km) reservoir that holds at least a combined 51 tcm of gas and 50 billion barrels of natural condensates. Iran has exclusive rights over 3,700 sq.km of this reservoir in its celebrated South Pars field (containing around 14 tcm of gas), with Qatar’s North Field comprising the remaining 6,000 sq.km (and 37 tcm of gas).
A new cooperation accord was reached between Tehran and Doha in 2017 on the shared reservoir and beyond. Since then, Qatar has overtly tried to avoid alienating either of the major two geopolitical power blocs
Over and above the need for a good relationship between Qatar and Iran to ensure the optimal functioning of their huge joint gas reservoir, Russia and Iran see another area of particular vulnerability in Doha’s political makeup that can be exploited in the building out of a Gas OPEC, and that is its dislike for its other neighbor, Saudi Arabia.
Together, Russia, Iran, and Qatar account for just under 60 percent of the world’s gas reserves, and they were the three countries instrumental in the founding of the GECF, whose 11 members control over 71 percent of global gas reserves, 44 percent of its marketed production, 53 percent of its gas pipelines, and 57 percent of its LNG exports.