Turkey can incentivize Iran to export natural gas

Published 28.09.2015 22:17

The removal of international sanctions on Iran is expected to be one of the most consequential events for global energy markets. U.S.-based think-tank the Atlantic Council has evaluated possible consequences of Iran's full return to world energy markets on Eurasian energy architecture and Eurasian geopolitics with a report titled "A Post-Sanctions Iran and the Eurasian Energy Architecture: Challenges and Opportunities for the Euro-Atlantic Community."

According to a report by Dr. Michael Tanchum to ensure a Eurasian energy architecture more favorable to EU and NATO interests, Caspian natural gas suppliers besides Azerbaijan need to be included in the Southern Gas Corridor (SGC), namely Iran and/or Turkmenistan. The report predicts that if Iran reaches its 40 million ton liquefied natural gas (LNG) export target, it will have 12.8 billion cubic meters to 32.8 billion cubic meters (bcm) available for pipeline exports. In this instance, Tehran would face a stark geopolitical choice for the destination of its pipeline exports. "Iran could export piped gas to two of the following three export markets: EU and Turkey via the Trans Anatolian Natural Gas Pipeline (TANAP), India via an Iran-Oman-India pipeline, or China via either Turkmenistan or Pakistan," the report says.

The report also suggests that Iran can be encouraged to transport 7 bcm annually through the TANAP with sufficiently effective incentives offered by Turkey and Azerbaijan. "Iran may be induced to send this amount provided it receives favorable terms for an equity share in TANAP," Tanchum suggests in the report. Accordingly, the relative power balance between the EU and China in the Eurasian energy architecture will be determined by the natural gas export volumes each receives from Iran and Turkmenistan. "Without Iranian piped gas exports via TANAP, exports from Turkmenistan become critical for the SGC's long-term viability," he predicts.

Tanchum further predicts in the report that in addition to enhancing the security of the EU's natural gas supply, the Euro-Atlantic community could create a Eurasian energy architecture that promotes both stability and the development of Euro-Atlantic political norms in the Caucasus and Central Asia.

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