Armenia’s Becoming Transit Country is in Interests of Iran and Russia

• 05.18.2015, 22:48
• Liana Hovhannisyan
•  EEU,  Region,  World,  Armenia,  Analytics

"Consulting companies are reviving old contacts, lots of signs that companies are pre-positioning themselves. One sign of the degree of interest is that it’s impossible to get a hotel room these days in Tehran," the words of Bijan Khajepour, an Iranian businessman, who, as the Guardian reports, is managing partner of the Vienna-based Atieh International consultancy,   tells a lot about current situation in Tehran and growing interest from the West to restart cooperation with Iran in energy sector.

Such energy giants as France’s Total, Royal Dutch Shell, Italy’s Eni and Norway’s Statoil have already expressed their interest to reenter Iranian market and restart cooperation with Iran. In this context it was not incidental that according to the Iranian oil ministry, 1,200 Iranian companies and 600 international businesses from 29 countries such as Britain, China, France, Germany, Russia, Singapore and the United Arab Emirates attended the four-day 20^th International Oil, Gas, Refining & Petrochemical Exhibition in Tehran that aimed at attracting foreign investors to Iran as the deadline for nuclear deal, June 30, is approaching.

"If sanctions are removed, many rivals will enter the Iranian market," Forsat Emrooz Newspaper quoted the predictions of Managing Director of Iran’s Pars Oil Company Hossein Vafaee. Perhaps this is the logic why Russia spares no effort to deepen its cooperation with Iran in energy sector before it is too late and Western investors manage to take leading role in Iran. Notwithstanding various predictions according to which the flow of Iranian oil onto global markets will cut the revenues of the Russian oil exports, Russia is aiming to bolster cooperation with Iran, open new business opportunities and to stymie regional rivals, such as for example Turkey,  interested in investing in Iran.

Based on this logic one can easily explain the establishment of a joint working group between the National Iranian Gas Company (NIGC) and Russia’s Gazprom in 2014 that aimed at expanding ties and cooperation between the world’s gas giants.  As Asghar Soheilipour, Deputy-Oil Minister and the head of NIGC recently informed Iran’s oil ministry officials had meetings with Russian companies on the sidelines of Moscow Energy Exhibition. On the occasion he particularly mentioned:

"Russians are very interested in Iran’s gas sector to participate as investors in the country’s gas projects having abandoned projects in eastern Europe; they have made a $2bn investment package, and the negotiations with Russian companies still continue,"  the Iranian Project reports.

Russia’s willingness to further deepen cooperation with Iran in energy sector was also expressed by the Gazprom representative, Sergey Lasutenko, during the 20^th International Oil, Gas, Refining & Petrochemical Exhibition in Tehran. On the occasion the latter particularly stated:

"We have our own technologies while Iran has its own. We have a vast experience in offshore works. Gazprom is very good at sea drilling. We know that Iran has two seas: the Persian Gulf and the Caspian Sea; the Persian Gulf is very rich in oil and gas reserves and we can cooperate in this area," Iran Daily reports.

In addition Sergey Lasutenko also referred to Gazprom's capabilities in constructing gas pipelines and noted Russia and Gazprom also have the world's largest and longest pipelines and so they can help construct high-quality equipments.

Another important and inevitable development that is to be considered is that after lifting sanctions Iran is to become an oil exporter to Europe and an alternative source for Europe to get gas from. This is the development that seems to contradict Russia’s interest in the region. However, in this situation Russia can also derive its benefits. As it is known there are three potential routes Iranian gas can be exported to Europe:  either through Armenian, through Turkey or through Azerbaijan. Taking into consideration the fact that Armenia is a member of the Eurasian Economic Union (EAEU) Russia and Armenia, as members of the same Economic Union, share common economic interests. Accordingly it should be within the interests of Russia that Iran exports its gas to Europe through Armenia and not through Azerbaijan or Turkey; the latter has already proved its  aspirations to become major regional rival to Russia with is investments in Iran.  

If one takes into consideration recent development and existing disagreements between Iran and Turkey on the one hand and Iran and Azerbaijan on the other hand, it seems that it should be within the interests of Iran as well to export its gas to Europe through Armenia, which is Iran’s closest and reliable ally as opposed to Turkey and Azerbaijan. It is well known that Turkey and Iran are on opposite camps on the crises in Syria and Yemen. The disagreements between the two countries were further escalated recently after Erdogan accused Iran of trying to dominate the region and pursuing a sectarian agenda in Syria, Iraq and Yemen. As it is known in Syria Iran supports Bashar al-Assad’s regime, while Turkey backs Syrian opposition forces and is for  Assad’s giving up power. In Yemen, too, they have strong disagreements: Iran supports the Shia Houthi rebels while Turkey backs Saudi Arabia's air strikes against the Houthi forces,  also known as Ansar Allah (the Supporters of God). 

In addition recently it was voiced by the Iranian media that Turkey intentionally makes investment only in Atorpatkan and other Turkic-speaking communities of Iran.  The same concern was also voiced by Iranian professor Shireen Tahmaaseb Hunter Washington Georgetown University. As Panorama.am, reports on the occasion she particularly noted:

"The investment from Turkey only in the Turkic-speaking communities of Iran deserves serious attention. Why do Turks make investments only in Atorpatkan or in other Turkic-speaking communities in Iran.  Why don’t the Turks make investments in the South of Iran, for example in Bandar Abbas. This speaks of Turkey’s real intention behind its action."

Thus if one takes into consideration the above mentioned it seems that we have a kind of interesting triangle formed: both Armenia and Russia are going to mutually benefit if Iranian gas is exported to Europe through the EAEU area. On the other hand taking into consideration recent regional developments in the Middle East and Turkey’s controversial stance in the region, Armenia becomes the most reliable partner for Iran to cooperate with in the energy sector; the cooperation from which both countries are going to benefit both short and long perspective.