Commentary Magazine


Topic: oil and gas infrastructure

It’s a Gas

Why is Dmitry Medvedev now reporting himself to be losing patience with Iran? The likelihood that he is blowing hot merely as a prelude to blowing cold again is, of course, pretty strong, given his failure to demonstrate any reliable support for tougher sanctions to date. But Medvedev’s protestations to President Obama in Singapore coincided with a Russian announcement that the nuclear reactor at Bushehr, which depends on Russian technical support, will not be brought online in 2009 as previously projected. This is a material setback for Iran’s overall nuclear program – and comes on top of Moscow’s continued refusal to deliver the S-300 air-defense system Iran contracted to buy in 2007.

Nothing in Russia’s history of dealing with revolutionary Iran supports the conclusion that Medvedev wants to get tough with Iran because he shares a common purpose with the Western powers to prevent Iran’s nuclearization. But Russia is wielding bargaining chips with Tehran at the moment, and is uttering vague words that might be interpreted by optimistic Westerners as support for intensified sanctions. Is Moscow seeking to leverage something from the West – or from Iran?

The clue to this puzzle may be flowing through pipelines in Central Asia. Iran is actually the key to what is being hailed in the region as the liberation of gas-rich Turkmenistan from the stranglehold of Gazprom. Turkmenistan, with the world’s fourth-largest reserves of natural gas, is no small prize. Its gas production was second only to Russia’s in total Gazprom output, until a pipeline explosion in April prompted a cutoff by Ashgabat amid allegations that Gazprom had sabotaged the pipeline to intimidate the Turkmens. Gazprom accounts for 10 percent of Russian GDP and 25 percent of federal tax revenues, but its highest-producing Siberian fields are being quickly depleted of their recoverable gas, with production from them expected to decline to nil by as early as 2020. Control of Turkmen gas is a major financial issue for Moscow.

Turkmenistan has found pipeline partners in Iran and China, however, and next month anticipates inaugurating an increased gas flow to Iran that could ultimately connect it, through Turkey, with the Nabucco pipeline that will bypass Gazprom to bring gas to Europe. By one route or another, the pipeline through Iran promises to be a gateway to Western consumers. President Berdymukhamedov emphasized his country’s gas independence in October by replacing most of the oil- and gas-industry officials in Turkmenistan. On November 1, in a fresh start after their ugly gas-pricing dispute of 2008, Turkmenistan welcomed a delegation from Iran seeking to eliminate customs barriers, increase trade, and jointly develop oil and gas infrastructure in the Caspian Sea.

Russia has never hesitated to twist foreign arms for Gazprom, whose revenues prop up the state and make its military acquisition program possible. It’s considerably more likely that Iran is being pressured on its gas arrangements with Turkmenistan than that Russia’s government has begun seeing the Iranian nuclear problem through Western eyes.

Why is Dmitry Medvedev now reporting himself to be losing patience with Iran? The likelihood that he is blowing hot merely as a prelude to blowing cold again is, of course, pretty strong, given his failure to demonstrate any reliable support for tougher sanctions to date. But Medvedev’s protestations to President Obama in Singapore coincided with a Russian announcement that the nuclear reactor at Bushehr, which depends on Russian technical support, will not be brought online in 2009 as previously projected. This is a material setback for Iran’s overall nuclear program – and comes on top of Moscow’s continued refusal to deliver the S-300 air-defense system Iran contracted to buy in 2007.

Nothing in Russia’s history of dealing with revolutionary Iran supports the conclusion that Medvedev wants to get tough with Iran because he shares a common purpose with the Western powers to prevent Iran’s nuclearization. But Russia is wielding bargaining chips with Tehran at the moment, and is uttering vague words that might be interpreted by optimistic Westerners as support for intensified sanctions. Is Moscow seeking to leverage something from the West – or from Iran?

The clue to this puzzle may be flowing through pipelines in Central Asia. Iran is actually the key to what is being hailed in the region as the liberation of gas-rich Turkmenistan from the stranglehold of Gazprom. Turkmenistan, with the world’s fourth-largest reserves of natural gas, is no small prize. Its gas production was second only to Russia’s in total Gazprom output, until a pipeline explosion in April prompted a cutoff by Ashgabat amid allegations that Gazprom had sabotaged the pipeline to intimidate the Turkmens. Gazprom accounts for 10 percent of Russian GDP and 25 percent of federal tax revenues, but its highest-producing Siberian fields are being quickly depleted of their recoverable gas, with production from them expected to decline to nil by as early as 2020. Control of Turkmen gas is a major financial issue for Moscow.

Turkmenistan has found pipeline partners in Iran and China, however, and next month anticipates inaugurating an increased gas flow to Iran that could ultimately connect it, through Turkey, with the Nabucco pipeline that will bypass Gazprom to bring gas to Europe. By one route or another, the pipeline through Iran promises to be a gateway to Western consumers. President Berdymukhamedov emphasized his country’s gas independence in October by replacing most of the oil- and gas-industry officials in Turkmenistan. On November 1, in a fresh start after their ugly gas-pricing dispute of 2008, Turkmenistan welcomed a delegation from Iran seeking to eliminate customs barriers, increase trade, and jointly develop oil and gas infrastructure in the Caspian Sea.

Russia has never hesitated to twist foreign arms for Gazprom, whose revenues prop up the state and make its military acquisition program possible. It’s considerably more likely that Iran is being pressured on its gas arrangements with Turkmenistan than that Russia’s government has begun seeing the Iranian nuclear problem through Western eyes.

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