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Gas axis “RF - TURKMENISTAN – IRAN” - the future of eurasian gas

The Chairman of the Council of the Union of Oil and Gas Industrialists of RF Yuri Shafranik is convinced that the future of Eurasian market is in the gas axis Russia-Turkmenistan-Iran. In an exclusive interview to ITAR-TASS correspondent Alexey Kravchenko. Yuri Shafranik who is also the head of councils of business cooperation of Russia with many Central Asian and Middle Eastern countries commented on opening of a second gas pipeline connecting Turkmenistan with Iran that happened in Ashkhabad last month and on this event’s meaning for Russia.

QUESTION: Yuri Konstantinovich, Turkmenistan and Iran actively increase cooperation in the sphere of the fuel-energy complex. Should this example stimulate Russian power also together with business to activate a direct dialogue with Iran?

ANSWER: I suppose that Russia is building relations with Iran quite independently, but the neighbor’s example is also instructive. This relates also to the opening at the beginning of January of a second pipeline which will deliver Turkmenistan’s gas to Iran. By the way the first gas pipeline between these countries was opened as early as in 1997. Somewhat later being the minister (of fuel and energy) I by all means supported Turkmenistan’s leadership’s aspiration to develop pipeline system. Being rich of blue fuel the country is simply obliged to strengthen its economy by using the chance given by nature. She is obliged to have pipes going to all parts of the world.

In this respect Russia I am sure should show an example of assiduous approach to utilization of hydrocarbon resources what I suppose will be powerfully stimulated by the gas axis Russia-Turkmenistan-Iran, the doctrine of which is yet to be formulated. Development and active implementation of this doctrine I am sure would have allowed to give the picture of the continental gas market a more civilized image.

What am I driving at? The most important thing is, of course, not that Russia, Turkmenistan and Iran are “pierced” by a meridian axis from the Kara Sea to the Arabian Sea , though this makes solving of transportation problems easier. Important is that they all are main players at the gas market of a huge continent and even of the whole world – at least at present. And our countries have all the reasons I would say even a historic responsibility to conduct a united policy in determining participants and volumes of production, direction of transportation of resources and – the most important – in determining prices of gas deliveries.

I would stress here that there is no way to speak about price dictation. But absolutely reasonable and fair prices would allow our countries not only sustain the production of non-renewable resources but to develop other branches of economy. This is, to my view, the purpose of the Gas Axis Doctrine. To develop its contents is not a difficult task. Important is not to drown the idea in a quagmire of unending coordination process feeding not always constructive inventions around non-started business. Important is to act everyday and first of all on the diplomatic front. I would stress particularly that the gas axis project can become a major factor in economic development of Turkmenistan, an important factor for Russia and turn out to be a serious plus for the global economy.

QUESTION: If the Doctrine begins to work how many more kilometers of pipes have to be laid?

ANSWER: One should learn a simple truth … The more pipes are laid by a hydrocarbons producer the more dependent he becomes on consumer. Add to this the

QUESTION: who bears the costs of pipelines construction? The

ANSWER: always the producer? If someone gets documentary guaranties for deliveries of certain volumes of gas he will easily receive a bank credit for a respective pipeline construction on these gas volumes. He seems not to have touched the producers money but it turns out that he already is selling his product.

Take the project “Nabucco”, for example. If the European Union needs it so badly as they say there, then why not to allocate in the budget of an influential and wealthy organization 10 billions of Euros for the gas pipeline construction? Do not nourish any hopes! Because the European Union does not want to depend on resources, suppose, of Iran and Turkmenistan. The consumer is used to an opposite dependency and has not a slightest motive yet to deny himself of this habit for the sake of finding a balance of interests.

Consequently there is another weighty stimulus to quickly create the gas axis for consecutive, unhurried thoroughly coordinated actions directed at the achievement of optimal balance of interests of suppliers and consumers of energy resources.

It will not come into producers heads to stop to pump gas to the west or inflate prices of fuel by 5 times. But substantiated volumes of production, substantiated prices, substantiated transit flows, finally, substantiated programs of joint development – all this is extremely significant not only for prosperity of the sides of a proposed interstate project but for forming of really mutually beneficial relations between producers and consumers of energy resources.

QUESTION: Recently extensive consultations of the Big Six (US, Great Britain, FRG, France, China and Russia) about hardening of anti-Teheran sanctions have been under way. How complicated is Russian position on this problem? Sanctions are provoking Iran for isolationism which does not facilitate development of good neighborly relations and for resource nationalism which in the end will deal a serious blow to the interests of hydrocarbons consumers, are not they?

ANSWER: Politics is not my sphere of interests. But everything that concerns international coordination of actions for the sake of common energy security and development of the world fuel-energy complex (including nuclear power) deserves support. And the rest … There are already enough threats for mankind that is why it is extremely undesirable that some other country be it a decent one in all respects acquire a nuclear club.

Indeed what is right now undertaken by Russia and Turkmenistan enables Teheran to overcome economic and, as a consequence, political isolation.

QUESTION: According to Iran’s ambassador to Azerbaijan’s words, Iran wishes to increase the volume of gas bought from Azerbaijan. In relation to this the sides are discussing the possibility of laying an additional pipeline. Does Iran have not enough of its own gas?

ANSWER: Iran disposes of huge gas reserves, but most of them lie in the southern part of the country. Let me remind you that at a certain time the South of Tyumen, Omsk and Saratov regions were receiving gas from Kazakhstan. And this was absolutely reasonable route. Besides. mining industry and infrastructure in Iran are underdeveloped. They lag behind “advanced” countries for several decades. Because of that it is much simpler (and cheaper) to provide the North of Iran with the gas from Azerbaijan’s pipe. I will add that it would be very useful for international cooperation if in the future Azerbaijan, Russia and Turkmenistan supply gas to the North of Iran making southern reserves of the country available for transportation for instance to India and other (suitable for economic transit) countries.

One sees a great perspective for all states of the Caspian Sea region in blue fuel deliveries to the North of Iran and in participation of opening up of southern gas projects of the country (including construction of an LNG-plant and transportation of LNG). Indeed speaking about supposed founders of the Gas Axis Doctrine I singled out three main market players due only to the fact that it is simpler for them to give a start to this strategic project but its “doors” must be open for all.

Having come through the most difficult period of acquiring a new quality of sovereign states Azerbaijan, Kazakhstan, Turkmenistan, Russia have all the reasons and opportunities to play an influential role on the world market of hydrocarbon resources without opposing the side of consumers but firmly following their common economic interests.