Monday, July 6, 2009

EU Looking at Iran's Natural Gas for Security

TBILISI, Georgia -- Uncertain supplies from Central Asia and Iraq have led a European Union-backed pipeline consortium to look to Iran as a source of natural gas to reduce Europe's dependence on Russian energy.

The proposed $11.1 billion Nabucco pipeline, which would run from Central Europe through the Balkans and Turkey, would bring natural gas to Europe from Caspian Sea nations if it comes online in 2014.

Austria, Bulgaria, Hungary, Romania and Turkey -- the countries through which the pipeline would pass -- will sign an agreement in Ankara, the Turkish capital, next week to provide a legal framework for allocating gas to each country, Agence France-Presse reported Saturday.

However, such a signing has already been delayed several times.

Reinhard Mitschek, managing director of Nabucco Gas Pipeline International, confirmed in a phone interview that he envisions supply coming from two feeder pipelines -- one in Georgia, the other in Iran. Nabucco would also possibly transport Iranian natural gas to European consumers.

"In order to secure supplies, every market player -- be it a producer, or a transmission system operator, or a downstream operator or a gas trader -- wants to diversify the gas portfolio. And that's what we are doing," he said.

Mr. Mitschek stressed that Nabucco's role is only to transport the gas and the eventual decision whether to buy Iranian gas will be made by European buyers.

The United States has repeatedly voiced opposition to Iranian involvement in the pipeline, but U.S. companies have no direct stake in the project. However, the U.S. could penalize companies involved in Nabucco through its Iran Sanctions Act.

In recent weeks, Iran has provoked strong criticism from Western nations for its violent crackdown against massive protests disputing its June 12 presidential election results.

Ariel Cohen, a senior research fellow at the conservative Heritage Foundation in Washington, said Iran's involvement could endanger European energy security.

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