26 July 2011, 15:28

Islamic Pipeline to challenge Nabucco

Islamic Pipeline to challenge Nabucco
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Iran, Iraq and Syria have signed a memorandum on laying a pipeline. Its resource base is the South Pars gas field in Iran. It is planned to lay the pipeline through Iraq, Syria and further Lebanon and Europe under the Mediterranean Sea.

Iran, Iraq and Syria have signed a memorandum on laying a pipeline. Its resource base is the South Pars gas field in Iran. It is planned to lay the pipeline through Iraq, Syria and further Lebanon and Europe under the Mediterranean Sea.

The pipeline has been given the name of the Islamic Gas Pipeline and Tehran suggests considering it an alternative to Nabucco. The EU means to lay Nabucco from Turkmenistan through Azerbaijan, Georgia and Turkey to Bulgaria, Hungary, Romania and Austria. After signing the memorandum on laying the Islamic Pipeline, the head of the Iranian NIGG state gas company Jawad Oji declared that South Pars contains 16trln cubic metres of gas, which is a reliable source of deliveries and a necessary condition for laying a gas pipeline which Nabucco does not have. He also reported that Turkey will be a partner of Iran, Syria, and Iraq in this project and a written agreement on this issue has already been created.

The EU cut Iran off Nabucco last year as a sanction against Iran developing its nuclear programme, so Iran decided to take part in a new project. At the same time, laying a gas pipeline from Iran to Europe involves a great risk, believes Konstantin Simonov, the director of the National Energy Safety Foundation.

“Everyone is aware of political risks associated with Iran. It is common knowledge that the EU has introduced tough sanctions, so there is no point in seriously planning to lay a pipeline from Iran. Moreover, the construction will never begin because Iran and Syria have no money and foreign financial resources are unavailable to them.”

The estimated cost of the project is $10bln. If it is ever implemented, Europe will be able to receive up to 40bln cubic metres of gas a year. This is 30% more than what the EU expects to have from the Nabucco pipeline. Experts do not rule out that Qatar may join the Islamic Pipeline in the future, so if political factors are ignored, this project can really be considered a promising one.

The pipeline is planned to be put in operation by 2016. Iran expects the final contract to be signed by the end of this year. Private capital is also encouraged to take part in the project. A number of experts see the Islamic Pipeline as a competitor to South Stream, the pipeline which Russia intends to lay under the Black Sea to Europe. This can be assumed in theory but is difficult to achieve in practice. The pipeline will have to run through several countries and the larger the number of participants the less realistic is the plan: a change in the political situation in any of the countries will jeopardize the whole project.

These countries are Iraq, Syria and, possibly, Lebanon. To compare, South Stream will also run through several countries but Russia has already signed interstate agreements with Bulgaria, Serbia, Hungary, Greece, Slovenia, Croatia and Austria on the legs of the pipeline that will be laid on the surface of European territories. Apart from that,  preliminary design documents for the pipeline have already been agreed upon with most of those countries, so the Islamic Pipeline is no competition to South Stream at all.

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