The European Commission vice-president for energy union, Maros Sefcovic, said during a visit to Azerbaijan last week that the European Union was ready to negotiate Iran’s participation in the Southern Gas Corridor (SGC), a system of pipelines designed to pump Azerbaijani gas from the Caspian region to southern Italy via Georgia, Turkey, Greece and Albania.
The European bloc is keen to get its hands on Iranian gas and has already held talks with Tehran on the issue. This means it is unlikely that the EU will budge on its opposition to US President Donald Trump’s demands for revising the Iran nuclear deal.
Two different visions
It has been reported that the US State Department is trying to persuade the EU to collaborate in improving the pact that Iran and six world powers (the United States, China, Russia, Germany, the United Kingdom and France) signed in 2015. Aimed at reining in potential military applications of Tehran’s nuclear program in exchange for relief from economic and financial penalties, the accord has been criticized by Trump since his presidential campaign.
Last month, the US president suspended nuclear-related sanctions on the Islamic Republic for another 120 days. However, he said Washington would abandon the agreement if European signatories did not agree to modify part of it.
Trump is seeking an additional agreement to limit Iran’s uranium enrichment permanently – under the current terms, restrictions expire in 2025. The US commander-in-chief also wants a stronger regime of inspections by the International Atomic Energy Agency, and the imposition of new sanctions if Tehran develops or tests long-range missiles. He says that without these changes the Islamic Republic will be able to make a nuclear bomb.
So while Trump has basically sent an ultimatum to the EU, the State Department has chosen a softer approach, inviting the European grouping and its major countries to consider working together on what Washington views as the Iran nuclear pact’s deficiencies.
The first response to the US diplomatic move is not encouraging, however. On Monday, the French Foreign Ministry said Paris was committed to the deal with Tehran, which has to be strictly implemented. Of Trump’s requests, the EU seems willing to discuss only the one regarding Iranian missile activities. But EU foreign-policy chief Federica Mogherini has time and again emphasized that this issue is not related to the nuclear accord.
Iranian gas and European energy independence
The reality is that the EU is eager to deepen business interactions with Iran, and gas export is a promising sector, particularly in relation to the construction of the SGC. This infrastructure project, which is worth US$41.5 billion, is intended to reduce Europe’s dependence on Russian energy resources – Russia’s monopolist Gazprom provided EU countries with 151 billion cubic meters (bcm) of gas in 2016.
The SGC will consist of three conduits, the South Caucasus Pipeline (SCP), the Trans-Anatolia Natural Gas Pipeline (TANAP) and the Trans-Adriatic Pipeline (TAP). It is expected to start deliveries to Europe in 2020, piping 10bcm of gas from the Shah Deniz field on Azerbaijan’s Caspian Sea coast.
Brussels is interested in ramping up the capacity of the SGC system with sources of supply other than the Caucasian country. The objective is to increase potential supplies to 80-100bcm of gas annually down the line. To reach this goal, the EU aims to connect the SGC platform with gas fields in Turkmenistan, Iraq, the eastern Mediterranean Sea and Iran.
Tehran is not indifferent to the EU’s courting. It is actually already cooperating with the SGC consortium, given that the National Iranian Oil Company has a 10% stake in the development of the Shah Deniz field.
Iran could send gas from its South Pars gas field, in the Persian Gulf, to Europe through Turkey. However, it must first build a 1,900-kilometer pipeline to connect South Pars with TANAP. The prospective IGAT-9 conduit should transport 110 million cubic meters of gas per day.
The problem is that its cost is estimated at $7 billion. This, combined with the $50 billion needed to complete South Pars’ development and preserve its output level after 2023, make the creation of a gas connection between Iran and Europe very challenging without the help of foreign investors.
European energy companies could play a major role in modernizing Iranian gas infrastructure. Possible new US sanctions against Tehran are clearly at odds with this design.
In its National Security Strategy, the Trump administration says it will help allies and partners reduce reliance on “those that use energy to coerce.” Paradoxically, Washington’s confrontational position toward Iran risks undermining the EU’s efforts to diversify its energy suppliers and, accordingly, degrade Russia’s ability to use gas exports to influence European geopolitics.