Contract for pipe to Europe signed

Iran Times International July 30, 2010:Iran has signed a $1.3 billion contract with a Turkish en- ergy firm to build a pipeline that would carry a huge quantity of Iranian gas across Turkey to Europe. But no one has said who in Europe will buy the gas. The pipeline would enable Iran to almost triple its gas exports overnight and so is a very major project. But the announcements on the pipeline from Iran and Turkey diverged dramatically on the size of the pipe and the projected date of completion—not to mention that no one mentioned whom the gas was intended for. Turkish Energy Minister Tander Yildiz was swift to deny that either the Turkish government or the Turkish state pipeline company, BOTAS, had signed the contract. Turkey seemed eager to put some distance between itself and the contract, presumably to try to avoid further fueling growing American testiness with Turkey. Turkey has been talking with Iran for some time about taking on a portion of the development of South Pars, the largest gasfield in the world. But Yildiz said those talks have gone nowhere and have now been canceled, certainly a relief for the United States. Sitki Ayan, the chairman of Som Petrol, Turkey’s largest private energy firm, said his company had signed the pipeline contract with the Iranian National Gas Co. (INGC), a state firm. Both Som and NIGC said the pipeline would carry gas to Europe. But neither said whom the European customer would be. For a decade, a European consortium led by an Austrian firm has been trying to build a pipeline to carry Caspian gas from Azer-baijan to Europe. That remains on the drawing boards. A Swiss firm signed a contract two years ago to buy Iranian gas to fuel its generating plant in Italy, but the method for getting the gas from Iran to Italy has not been announced. There was much speculation the new pipeline would supply the Swiss firm. Javad Owji, the head of NIGC, said, “The pipeline will enable Iran to export 50 to 60 million cubic meters of gas per day.” But Som’s Ayan said the pipe would carry 110 million cubic meters. Iran currently exports only 23 million cubic meters a day, all of that to Turkey. So the new pipeline would convert Iran into a major gas exporter overnight. The pipeline is due to be completed in three years, Owji said. Ayan said four years. Neither the NIGC nor Som said where the capital was coming from. The Iran-Swiss gas supply contract was signed in March 2008 with Elektrizitaets-Gesellschaft Laufenburg (EGL). It was the very first gas supply contract ever signed by Iran with any European firm. And it irritated the United States, which made a point of expressing its displeasure on the website of the U.S. embassy in Berne. The embassy very publicly complained that the Swiss government had not shown Washington a copy of the contract. “We have conveyed to the Swiss that major new oil and gas deals with Iran send precisely the wrong message at a time when Iran continues to defy UNSC [UN Security Council] resolutions,” the embassy statement said. The embassy said it first asked to see the contract in June 2007 when it learned one had been drafted. It said it repeated that official request after the contract was signed in Tehran March 17, 2008. “We have not received a response to our request,” the statement said pointedly two weeks later. The contract has not been controversial in Switzerland, where the only extensive criticism has focused on the fact that Swiss Foreign Minister Micheline Calmy–Rey wore a headscarf in Tehran for the signing. Switzerland has pointed out that the contract is a natural gas supply agreement and does not involve any Swiss investment whatsoever in Iran—and thus does not trigger U.S. sanctions against firms that invest in the Iranian oil and gas industry. Under the contract, Iran was to pipe the gas to Turkey, which would pipe it on the Greece. At the Adriatic, a new pipeline planned by EGL is to bring the gas to Italy, where it will fuel an EGL power plant. The new pipeline across Turkey and the 2008 contract would thus appear to mesh.

An explosion last Wednes day blew apart a section of the one pipeline currently delivering Iranian natural gas to Turkey. The explosion—inside Turkey near the Iranian border—was assumed to have been a bomb planted by Kurdish rebels who have long fought the Turkish government. The surprise was not the explosion, but the fact that the pipeline is blown up less than once a year. The length of the pipeline break was not announced but it was expected to be patched up within a week.

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