Iran: Energy Transport Route

Courtesy of Energy Daily, an interesting look at how – in the aftermath of the August military confrontation between Georgia and Russia –former Soviet republics and rising petro-states Azerbaijan and Kazakhstan have been reassessing their export options, with Iran receiving increased attention in both Baku and Astana. As the article notes, Iran has been moving quietly to position itself as an alternative energy export corridor and is receiving an increasingly sympathetic hearing from its Caspian neighbors whom, collectively, have proven oil reserves of 265.2 billion barrels (with Azerbaijan possessing 7 billion barrels; Iran 138.4 billion barrels; Kazakhstan 39.8 billion barrels; Russia 79.4 billion barrels; and Turkmenistan 0.6 billion barrels):

“…At the Oct. 10 opening in Tehran of Iran’s two-day International Oil Refining Forum, Iranian Oil Minister Gholamhossein Nozari told attendees that Iran is the Caspian’s safest and most extensive route for shipping Caspian energy from north to south; to that end, Iran has been upgrading its Caspian port facilities at Neka in anticipation of increased oil swaps. Contrasting the costs of swaps vs. alternatives such as the Baku-Tbilisi-Ceyhan and Caspian Pipeline Consortium pipelines, for which Russia, Georgia and Turkey collect transit fees from Azerbaijan and Kazakhstan, Iranian Foreign Minister Manouchehr Mottaki noted that delivering a barrel of oil through Neka would cost only $2 to $3.

In a direct reference to the region’s new geopolitical realities, Mottaki said, “Iran is ready to cooperate with foreign companies and states to ensure its oil supplies against the turmoil in the Caucasus,” adding, “Iran can transfer Caspian Sea oil to the Persian Gulf and free international waters via the shortest and best possible route.”

Warming to his theme of the vulnerabilities of Western export routes to potential conflict, the foreign minister offered a new project in direct competition with Western pipeline proposals. While Mottaki stated that Iran supports constructing a large oil pipeline to transport Caspian countries’ oil through Iran to the Persian Gulf, commenting that the Caspian Sea-Persian Gulf pipeline would be both advantageous and safe, he offered no specifics, such as the proposed pipeline’s capacity, its cost or the time needed for construction.

The Iranian pitch for transport business was accompanied by a direct appeal for foreign investment in Iran’s oil refining capacity. In an oblique acknowledgment that the 1996 U.S. Iran-Libya Sanctions Act for years has largely stymied Iran’s quest for significant foreign investment, Nozari commented that Iran’s oil refining industry now needs more than $20 billion in investment, adding that Iran was willing to “shake the hands which are able and would like to assist us.” Should such investment be secured, Iran intends to double its current refining capacity of 1.75 million barrels per day. In an unsubtle swipe at Washington, Mottaki added, “The bullying powers are trying to deprive world countries of the numerous blessings of participation in (Iran’s) oil and gas projects to maintain their monopoly over the (global) energy industry…”

This entry was posted on Friday, October 17th, 2008 at 1:13 pm and is filed under Azerbaijan, Iran, Kazakhstan, Russia.  You can follow any responses to this entry through the RSS 2.0 feed.  Both comments and pings are currently closed. 

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