Export of Russian gas to Iran through Azerbaijan: new benefits of Caspian integration

Export of Russian gas to the north of Iran through Azerbaijan will allow to complete both economic and political tasks of all participants of this deal, Russian economists said in an interview with Vestnik Kavkaza, commenting on the statement made by Russian President Vladimir Putin in Tehran yesterday after talks with Presidents of Azerbaijan and Iran Ilham Aliyev and Hassan Rouhani.

Vladimir Putin noted interest in supply of raw materials in the framework of this triangle using internal logistic. "We reaffirm our readiness to supply gas through the pipeline transport systems of Azerbaijan to the north of Iran," he said.

The executive vice-president of NewTech Services, professor of the Gubkin Russian State University of Oil and Gas, Valery Bessel, noted that Iran needs to make up for decline in supplies from Turkmenistan. "Iran has two gas pipelines in the north, one for 6 billion cubic meters of gas per year, another for 14 billion cubic meters of gas per year. Turkmenistan supplied gas to those pipelines, but now it sends all of its export gas to China, and we're taking Iranian market as part of the fight for market positions, which is quite natural," he said.

Azerbaijan is the best option in this case. "In fact, there is simply no other way, because Azerbaijan is a country with developed pipeline system, and its the closest transit country that has borders with Iran. Azerbaijan benefits from this project as a transit country, it's profitable for us as a country that will sell gas at much more expensive prices than domestic, and it's profitable for Iran, because they have no gas in the north," he stressed.

An associate professor of the Graduate School of Corporate Management of RANEPA, Ivan Kapitonov, drew attention to political aspect of this agreement. "This region is strategically important for Russia, and in this case we resolve not not only economic issues, but also political issues by promoting strengthening of mutual cooperation of the Middle East countries and, in one way or another, promoting Russia's mission as a global regulator in the region," he pointed out.

"In addition, the north of Iran is a pretty stable gas market, and it's great for Russia to diversify supply routes so that there won't be any issues with gas supplies due to politics, which we have faced recently, or ant other issues with buyers. This is an extremely promising step, our descendants will see positive results of it," he said.

The deputy director of energy policy of the Institute of Energy and Finances, Alexey Belogoriev, explained why there's a demand for Russian gas in Iran. "Iran's main problem is that its main production areas are separated from the center of consumption: production is concentrated in the south, while consumption in the north, so northwest regions will experience a gas deficit in the future," he said.

"Azerbaijan can't meet Iran's needs due to limited domestic production and obligations to supply gas to Turkey and Europe in the framework the "Southern Gas Corridor". It seems that's how the idea of supplying Russian gas through Azerbaijan originated, especially since necessary infrastructure for this purpose already exists, at least, between Russia and Azerbaijan," he concluded.