Proposed Iranian pipeline to Europe seems problematic for the time being

21 january 2016 | Russia - 24

There is essentially just one route for the pipeline from Iran to the EU and it crosses Turkey; and it is the Turkish section that is bound to be the most challenging part of the project, analysts believe. The borders have been volatile for many years and investors are unwilling to invest in areas where conflict can flare up at any time. The Analytical Center's expert Leonid Grigoriev sees other risks for the project.

Leonid Grigoryev
Leonid Grigoryev
Chief Adviser to Head of the Analytical Center

"From my point of view, all this talk about the Iranian pipeline to Europe is rather problematic at this stage," Mr Grigoriev said in the Energy Sector program on Russia 24 TV channel. "First of all, it is still unclear what route it would have to follow because all of Iran’s deposits are in the south, in the Persian gulf.  Northern Iran historically has been getting gas from Turkmenistan. In addition, there is hostilities there at the moment and you cannot build anything when bombs are falling all around you." The expert proposes one possible solution in a swap with Iran, under which Iran would pump gas to India, while Russia would increase supplies to the EU accordingly.

The expert noted that traditionally Iran always sold its natural gas to Asia, rather than to Europe. "Iran is going to be gradually increasing production and trying to enter new markets wherever possible," the expert believes. Mr Grigoriev is sure that exporters have once again painted themselves into a corner and have done so for the third time already (first it happened in 1986 and then again in 1998). 'What is happening is that because they are producing more than there is demand for, they are driving the price down even as they try to keep up production to hold on to their markets,' the expert noted.