The Russia-Iran alliance, as evidenced in the most recent multifaceted Memorandum of Understanding between Gazprom and NIOC, wants to control as much as possible of the two key elements of the global supply table – onshore gas delivered via pipelines and natural gas delivered via ships in liquefied natural gas (LNG) – as much as possible. According to a statement last week by Hamid Hosseini, president of the Iran Oil, Gas and Petrochemicals Exporters Association, in Tehran after the signing of the Gazprom-NIOC memorandum of understanding: “Now the Russians have come to the conclusion that the consumption of natural gas in the world will increase and the tendency to consume LNG has increased and they are not able to meet the global demand by themselves, so there is no room for natural gas competition [between Russia and Iran].” He added: “The winner of the Russia-Ukraine war is the United States and it will capture the European market, so if Iran and Russia can reduce the influence of the United States in the oil, gas and commodity markets by working together, it will also benefit the two countries”. The Gazprom-NIOC memorandum of understanding, as originally analyzed by OilPrice.com, contains four key elements geared towards the creation of an “OPEC Gas”. One element is that the Russian state-backed gas giant has pledged its full assistance to NIOC in the US$10 billion development of the Kish and North Pars gas fields with the aim of the two fields producing more than 10 million cubic meters of gas per day. A second element is that Gazprom will also fully assist with a US$15 billion project to increase pressure on the supergiant South Pars gas field on the maritime border between Iran and Qatar. A third element is that Gazprom will provide full assistance for the completion of various liquefied natural gas (LNG) projects and the construction of natural gas export pipelines. The fourth element is that Russia will consider all opportunities to encourage other major gas powers in the Middle East to join the gradual development of the “Gas OPEC” cartel, according to a senior source who works closely with Iran’s oil ministry. “Gas is widely seen as the optimal commodity for the transition from fossil fuels to renewables, so controlling most of the global flow of this will be key to energy-based energy over the next ten to twenty years, as it has already seen on a smaller scale in Russia’s dominance of Europe through its natural gas supplies,” he added. From the top down, the Russia-Iran alliance is focused on extracting overt or covert support for the OPEC gas build-up from other major Middle Eastern producers who are seen as undecided on committing to the Russia-Iran-China axis or the U.S. axis -Europe-Japan. Qatar (with the world’s third-largest natural gas reserves at just under 24 tcm and the leading supplier of LNG) has long been seen by Russia and Iran as a prime candidate for such a gas cartel, given that it shares its main source continued prosperity with Iran in the form of the 9,700 square kilometer (sq km) reservoir containing at least 51 tcm of gas and 50 billion barrels of natural condensate. Iran has exclusive rights over 3,700 sq km. of this reservoir in the famous South Pars field (which contains about 14 sq km of natural gas), with Qatar’s North Field comprising the remaining 6,000 sq km. (and 37 m2 of natural gas). A new cooperation agreement was reached between Tehran and Doha in 2017 on the joint reservoir and beyond, as discussed in depth in my latest book on global oil markets. Since then, Qatar has overtly tried to avoid alienating one of the two major geopolitical power blocs. Earlier this year, Qatar’s Emir, Sheikh Tamim bin Hamad Al Thani, visited the White House and in March met with German Economy Minister Robert Habeck, the latter visit to discuss how Qatar could help easing bans on Russian natural gas. in Europe. However, prior to these visits, Qatar entered into a series of long-term LNG supply agreements with China that caused considerable concern in Washington (hence Al Thani’s visit to the US in January). Beyond the need for a good relationship between Qatar and Iran to ensure the optimal functioning of their vast joint natural gas reservoir, Russia and Iran see another area of particular vulnerability in Doha’s political makeup that can be exploited in the building out of OPEC natural gas, and this is its dislike for its other neighbor, Saudi Arabia. The blockade of Qatar from 2017 to 2021 was orchestrated by Saudi Arabia and actively supported by the United Arab Emirates, Bahrain and Egypt initially, with later support from Jordan, Libya and other smaller states. It was never forgotten by Qatar, nor was the support given to Doha during the period by Iran and Russia, both independently and through Turkey. Together, Russia, Iran and Qatar account for just under 60 percent of global natural gas reserves and were the three countries that helped found the GECF, whose 11 members control more than 71 percent of global reserves of natural gas, 44 percent of the world’s natural gas reserves. it traded its production, 53% of its natural gas pipelines and 57% of its LNG exports. Its long-term mission statement, agreed in Moscow, is: “To strengthen GECF’s role on the global energy stage, to support the sovereign rights of member countries over their natural gas resources, to maximize their value for the benefit of people and to promote their coordination of global energy developments in order to contribute to global sustainable development and energy security”. There have long been statements of plans to increase the depth of cooperation between GECF members to the extent that it becomes as powerful in the natural gas market as OPEC once was (before it instigated the 2014-2016 oil price war against the US shale oil sector and lost from Saudi Arabia). As early as October 2008, high-level officials from Russia, Iran and Qatar met in Tehran to discuss tripartite cooperation and the possibility of forming a cartel of natural gas exporting countries similar to OPEC. A key part of the reason the idea did not fully materialize was Qatar’s reluctance to firmly align itself with the Russia-Iran alliance, meaning that the swinging supply side of the natural gas supply table – LNG – had remained out of control. Moscow and Tehran. It is true that Iran has sufficient natural gas resources to eventually become an LNG superpower, and part of the Gazprom-NIOC deal is geared toward making that happen, but it is also true that this is a medium to long-term project. In the short term, however, there are signs that Qatar’s reluctance to commit to OPEC for natural gas may be waning. The crucial feature of Doha’s economic plans is to remain the world’s number one LNG exporter, having lost that spot for a period relatively recently, and in this context, long-term deals with China are extremely important to it. . The early notable example – which set the pattern for subsequent deals – was China Petroleum & Chemical Corp.’s long-term purchase and sale agreement. (Sinopec) and Qatar Petroleum for 2 million tonnes per annum (mtpa) of LNG over a period of 10 years. Following these early deals with China, Qatar signed LNG supply deals with Iranian (and Chinese and Russian) ally Pakistan – specifically, a 10-year sale and purchase agreement for Qatar Petroleum to supply the Pakistan State Petroleum Corporation with up to and 3 mtpa of LNG at various ports in the country. This deal builds on the earlier agreement signed in 2016 for Qatar to supply Pakistan with 3.75 mtpa of LNG and came around the same time Pakistan’s close ally Bangladesh struck a similar deal with Qatar. By Simon Watkins for Oilprice.com More top reads from Oilprice.com:
