Russia and Iran are competing in Turkey’s NG market today

13 october 2016 | IA REGNUM

Russia and Turkey have recently signed an intergovernmental agreement on the Turkish Stream pipeline Despite being a direct competitor to Gazprom in the Turkish market, Iran has welcomed the Russo-Turkish agreements, saying it was not important who was going to supply gas to Turkey because it needed additional energy. “The Turkish natural gas market is the main market for Iran. However, by 2020 Iran may manage to start NG deliveries to other Middle Eastern countries,” the Analytical Center expert Alexander Martynyuk commented on the situation for a REGNUM correspondent.

Aleхander Martynyuk
Aleхander Martynyuk
Department for Strategic Studies in Energy

Russia and Iran are really competing in Turkey’s natural gas market today. In the future their positions are going to be determined by a number of political and market factors. It should be noted that Iran’s position on this issue should be regarded from the point of view of the interests, specific features, development level and development priorities of Iran’s natural gas industry as a whole in the short and medium term,” the analysts said.

In Iran the natural gas industry has been actively growing since the early 1990s. In this time, the increase in natural gas output has gone almost entirely on meeting domestic demand, Mr. Martynyuk explained. It was only since 2012 that the total exports of natural gas from Iran have consistently exceeded imports. The IEA estimates that in 2015 domestic supply of natural gas exceeded demand by just 1.2 billion cubic meters per year and that by 2021 it will have increased to only 4 billion cubic meters per year, the expert explained.

On the one hand, Iran needs significant investments and a lot of time to further expand natural gas production. On the other hand, now that the sanctions have been lifted it is only natural to expect domestic demand for natural gas to grow in industry as a whole and in the petrochemical sector specifically, the analyst hypothesized.

“In addition, even though Turkey is the main market that Iran exports natural gas to today (in 2015 Iran sold less than 8 billion cubic meters of natural gas to Turkey), Iran is in a very good position to start selling significant amounts of natural gas to other middle eastern countries by 2020,” Mr. Martynyuk believes.