Iran Seeks to Build $4 bln Gas Pipeline to Europe

A00210553.jpgTEHRAN (FNA)- Iran is seeking to build a $4 billion natural-gas pipeline to the European Union that may rival projects backed by the EU and Russia.

Iran in talks with a “renowned European company” that may operate the so-called Pars Pipeline, Deputy Oil Minister Akbar Torkan said in an interview in Tehran today.

“Surely, European countries are thinking about creating a lifeline in addition to Russia,” Torkan said. “Countries that believe buying gas from Iran is important enough and that don’t want to be manipulated by others will collaborate.”

At present Iran, which holds the world’s second-largest gas reserves after Russia, doesn’t export the fuel any farther west than neighboring Turkey.

The Pars Pipeline is Iran’s answer to the EU-backed Nabucco link and OAO Gazprom’s South Stream project, Bloomberg quoted Torkan as saying. Those projects are competing to supply western Europe with Caspian gas. He declined to provide a timeline.

Iran wants to pipe as much as 37 billion cubic meters of gas to Europe annually, about 20 percent more than either Nabucco or South Stream. Russia, which supplies about a quarter of Europe’s gas needs, is planning to increase that share by building South Stream under the Black Sea and the Nord Stream link under the Baltic.

US-imposed restrictions on foreign investment in Iran, designed to punish the government for pursuing a nuclear program, won’t scare off European partners in the pipeline, Torkan said.

“No one says that Iran’s customers can’t invest outside the country,” he said. “We will bring the gas up to the border, they will build the pipeline up to there.”

Torkan declined to name the European company holding talks on the pipeline, saying only that it isn’t Austria’s OMV AG, which heads Nabucco. The EU-backed project from Turkey and the Balkans to western Europe still has no supply base and hasn’t ruled out taking Iranian gas.

“We have no contract and no engagement with Nabucco,” Torkan said according to the Bloomberg report. “We have come up with a new route and will have new customers.”

From Iran, the Pars Pipeline will cross Turkey, passing on to Greece, Italy and onward to Switzerland, Austria and Germany, Torkan said. Eastern Europe will be completely avoided, he said, and all countries along the route will also buy Iranian gas.

Iran will tap its South Pars field, the world’s single largest gas deposit, to supply the Pars Pipeline.

South Pars gas exports would be more cost-effective through a pipeline rather than as LNG, Torkan said.

Iran, which sits on the world’s second largest reserves of both oil and gas, is facing US sanctions over its civilian nuclear program.

Iranian officials have dismissed US sanctions as inefficient, saying that they are finding Asian partners instead. Several Chinese and other Asian firms are negotiating or signing up to oil and gas deals.

Following US pressures on companies to stop business with Tehran, many western companies decided to do a balancing act. They tried to maintain their presence in Iran, which is rich in oil and gas, but not getting into big deals that could endanger their interests in the US.

Yet, after oil giants in the West witnessed that their absence in big deals has provided Chinese, Indian and Russian companies with excellent opportunities to signing up to an increasing number of energy projects and earn billions of dollars, many western firms are slowly losing reluctance to invest or expand work in Iran.

Some European countries have also recently voiced interest in investment in Iran’s energy sector after a gas deal was signed between Iran and Switzerland regardless of US sanctions.

The National Iranian Gas Export Company and Switzerland’s Elektrizitaetsgesellschaft Laufenburg signed a 25-year deal in March for the delivery of 5.5 billion cubic meters of gas per year.

The biggest recent deal, worth €100m ($147m, £80m), was signed by Steiner Prematechnik Gastec, the German engineering company, this month to build equipment for three gas conversion plants in Iran. This is at a time when France’s Total, Royal/Dutch Shell and Norway’s Statoil have put on hold their shares in multi-billion dollar contracts.

Washington and its Western allies accuse Iran of trying to develop nuclear weapons under the cover of a civilian nuclear program, while they have never presented any corroborative document to substantiate their allegations. Iran denies the charges and insists that its nuclear program is for peaceful purposes only.

Tehran stresses that the country has always pursued a civilian path to provide power to the growing number of Iranian population, whose fossil fuel would eventually run dry.

Despite the rules enshrined in the Non-Proliferation Treaty (NPT) entitling every member state, including Iran, to the right of uranium enrichment, Tehran is now under three rounds of UN Security Council sanctions for turning down West’s illegitimate calls to give up its right of uranium enrichment.

Tehran has dismissed West’s demands as politically tainted and illogical, stressing that sanctions and pressures merely consolidate Iranians’ national resolve to continue the path.

The UN sanctions address individuals and companies involved in nuclear- and arms-related activities without banning daily trade and non-nuclear investment.

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