Why did Gazprom Head visit Iran? (Report)

01 October, 2024
Source: Newz.AZ

Cooperation between Russia and Iran in the gas sector is gaining momentum, which is particularly important amid rising geopolitical tensions and changes in global energy supply chains

A recent visit by Gazprom’s delegation to Iran, led by CEO Alexey Miller on September 24, 2024, highlights the mutual interest of both countries in expanding their partnership. However, questions remain about the implementation of specific projects and gas supply routes.
Negotiations between Gazprom and Iran took a significant step forward in June 2024, when a strategic Memorandum was signed with the National Iranian Gas Company (NIGC). This agreement laid the groundwork for future deliveries of Russian natural gas to Iran, aimed at addressing energy shortages in the northern regions of the country. It’s important to note that while Iran’s major gas fields, like South Pars, are located in the southwest, the northern areas—home to large industrial consumers and harsher climates—are energy deficient.

The primary focus of the discussions is to explore mechanisms for implementing Russian gas supplies to Iran. Potential scenarios include swap deals, which would help meet the gas shortages in the northern regions, as well as infrastructure development for the export of liquefied natural gas (LNG). In 2022, Russia and Iran began talks on gas swaps, initially targeting a supply volume of 10 billion cubic meters per year, and these negotiations are gradually becoming more concrete.

Iran has also proposed a larger-scale gas swap to Turkmenistan and Russia , whereby gas delivered to Iran’s northern regions would be passed on for further export to the south, including to Pakistan. However, the realization of this plan hinges on Pakistan completing the Iran-Pakistan gas pipeline, which has been delayed. Additionally, LNG exports could become a reality if Gazprom and NIGC manage to finish the Iran LNG project, which was halted in 2018 due to U.S. sanctions.

One of the biggest challenges remains the choice of routes for Russian gas deliveries to Iran. One option under consideration is transit through Azerbaijan, where a swap deal of 5.5 billion cubic meters per year has been proposed. Another alternative is the Central Asian route, which would transport Russian gas through Kazakhstan and Uzbekistan to southern Turkmenistan and further to Iran. In July 2024, it was reported that Iranian companies plan to build a 125-kilometer gas pipeline and three compressor stations in Turkmenistan, which would ensure stable gas supplies.

Russia-Iran gas cooperation is at an active stage of development, and both countries show strong mutual interest in expanding this partnership. However, questions remain regarding the final routes of gas supplies and the implementation of LNG projects. It is clear that Iran views Russian gas supplies as a key element of its energy strategy, while Russia seeks to strengthen its presence in the region by exploring new opportunities for gas exports.

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