Global Gas Market: Alliances and Contradictions

ByMohammed Alsulami

Crises and contradictions in the Middle East became an instance for issues of complex situations, intricacies and discord of interests. Therefore, it cannot be said decisively whether natural resources such as gas and oil are a grace or a curse, and remarks of Saudi Arabia’s Crown Prince after announcing the Saudi Vision 2030 are not surprising. He reiterated the commitment that Saudi Arabia is determined to quit its “addiction to oil”.
The gas market problem is currently materializing in the region, and Qatar is increasing its gas production. This news will put Russia’s and Iran’s interests at stake, because, on the one hand, Iran has joint gas fields with Qatar, and on the other hand, Russia is concerned with preserving its own position as one of the biggest natural gas producing countries.
At the same time, Turkey’s gas is provided by Iran, there is a political and economic convergence between Ankara and Doha, the latter succeeds in exporting gas to Turkey. It is a country that can reach the gates of Europe, finding new markets for exporting its gas. Perhaps the Turkish President Erdoğan, by supporting Tamim, seeks to obtain cheap gas in an effort to ease Iran’s continuous pressure. Here, the difference between Iran and Turkey can be highlighted. Exporting Iran’s gas to Turkey through pipelines ceased due to Iran selling its gas to Turkey at a cost less than their agreement, damaging Turkey economically. As a result of this, Turkey took its complaints against Iran to the international courts.
If Qatar is considering exporting gas to Turkey, it must construct pipelines through the Arabian Gulf and via Iraq or Iran to Turkey. Iran would not permit such passages across its territorial land, waters or even the high seas as it would result in a decline of Iran’s share in Turkey’s markets. Asian countries, particularly India and Afghanistan, are currently the most important markets for Iran to export gas. While the plan for a pipeline transferring Iran’s gas to Pakistan is still undecided, Iran is in negotiations with India to sign a contract to invest $ 11 billion in one of Iran’s gas fields. Qatar realized Iran’s new approach and revoked the 12-year moratorium on the development of “North Gas Field,” the joint gas field with Iran. It must be mentioned that during the past few years, Iran has accused Qatar of exploiting the joint gas field in the Arabian Gulf. It has been suggested that the reason is a lack of necessary infrastructures and a decrease in Iran’s production from this field. Apart from an increase in Qatar’s production from the gas field, some Iranian officials have been accused of collaborating with Qatar and taking bribes.
Iran has one of the highest gas reserves in the world, but most of the produced gas is consumed domestically (in 2015, the amount of natural gas produced in Iran reached 192.5 billion cubic meters, and the consumed gas was 191.2 billion cubic meters). Moreover, a large part of the imported gas from Azerbaijan and Turkmenistan is given to consumers in the northern part of the country. Iran seeks to distance itself from Turkmenistan’s political pressures and threats to stop exporting gas in winter. Last year, Turkmenistan halted gas exports to Iran. What is more, Iran needs to develop the joint gas fields, particularly with Qatar. Now, perhaps Iran will take advantage of the situation, and increase the level of its production using Qatar’s imported technology for developing gas fields.
Russia is the biggest exporter of gas to many European countries. It has been a while since there has been a concern in Russia that Iran’s exports of natural gas to Europe and taking hold of the European market, are a threat to Russian interests, but with the current issue of Qatar on the table, Russia will no longer accept it. The issue of gas will probably have an impact on Russia’s political stance towards an alliance of Turkey, Iran, and Qatar.
In Obama’s era, the U.S., during the nuclear negotiations, had a misleading proposition for Iran regarding Europe’s gas market. Moscow went to negotiations over the Ukraine issue with Iran’s card. In the present time, President Trump’s administration moves in a direction quite the opposite to Obama’s administration; however, it is still facing the problem of Russia. Trump’s administration has threatened Iran with revoking JCPOA, intensification of supervising its implementation and taking more restrictive measures.
The crisis among the Gulf countries will revive the tension over the gas market, and as a result, all calculations of political equations of geopolitical classifications in the region will reverse. If the Gulf crisis prolongs, gas disputes will be more manifest. Apparently, given the current data, this crisis will continue.
On the other hand, Saudi Arabia by relying on its oil revenue has avoided entering the gas market for many reasons. It was even said that in recent years, Riyadh preferred to burn its own gas than to export it because of Qatar. Given this situation, is Saudi Arabia after a share in Europe’s gas market? If so, will it consider the plan for constructing a pipeline from the coasts of the Red Sea and Suez Canal to Europe? As Egypt is one of the key players in the current political arrangement in the region, there is a strategic option in this regard. Egypt’s gas reserves can be used as a political card for applying pressure. Two years ago, huge gas reserves were discovered in the Mediterranean Sea (Zohr Field). This field is close to Europe, and this large field’s production will soon begin. As such, Egypt will not only become self-sufficient in producing gas but thereafter will reach the level of exporting gas. If Egypt and Saudi Arabia were to come an agreement, a vast amount of Saudi Arabia’s and Egypt’s gas, with constructing a big network of gas pipelines, will be transferred to Europe through the Mediterranean Sea. This gas network will create new pressures, and will probably shift the political balance in the global energy market.
In general, transferring Gulf gas to Europe is not a new idea. In 2011, Iran proposed the plan for sending South Pars gas field to European countries through a pipeline from Iraq, Syria, Lebanon, and the Mediterranean Sea, thus facilitating gas transfer to Europe. Two years earlier, Qatar had proposed to Bashar Assad the construction of a pipeline for transferring gas from the joint field with Iran (North Dome-South Pars) through Iraq. This pipeline was to send gas through Aleppo Governorate in Syria to Turkey and Europe. Bashar Assad, however, rejected this proposal due to his relationship with Russia and Iran.
In short, tangled lines and conflict of interests even between political allies can be seen. In the horizon and near future, there is no hope of finding a viable solution, unless all arrays create resources other than oil and gas for economic development. Even though the Gulf crisis has laid the foundation for views of Turkey, Qatar, and Iran to get closer, this alliance is more tactical than strategic. Meanwhile, the Russian Bear is also closely watching its interests and global share.
Translated Material: Watan SA

Opinions in this article reflect the writer’s point of view, not necessarily the view of The Arabain GCIS

Mohammed Alsulami
Mohammed Alsulami
Founder and President of Rasanah