Seize the Opportunity
The Neka-Jask Pipeline –which aims to transfer one million barrels of oil per day from the Caspian littoral states of Kazakhstan, Turkmenistan, and the Republic of Azerbaijan to the Persian Gulf- needs a 3-4 billion dollar investment. Noghreh-Kar Shirazi added that: “A figure will be put on the project after the suppliers and the target economy have been identified. These two issues have not been fully addressed… economic assessments of the project are being carried out. [Although] some countries have announced their readiness, their current position is not clear. The exact suppliers should be known.”
Anyone familiar with the language of Iranian executives will read between the lines and discover that the project is a no go. While neither the suppliers nor the clients are known, discussing the project is merely a waste of time, energy, and budget resources. Economic and diplomatic reasons prevent Tehran from pursuing the project.
In the early 1990s, when the idea of the Baku-Tbilisi-Ceyhan Pipeline was floating around, some Iranian officials viewed it as a lever against Iran, and a project that would never materialize. Nonetheless, against the will of Iran and Russia, and with support of Turkey, Europe and the United States, the project -which brought about prosperous era to the Republic of Azerbaijan’s oil industry- was launched. Partial use of the pipeline capacity -one million barrels per day- is supposed to be compensated through an agreement between Baku and Astana (Kazakhstan), according to which the latter will export a slice of its oil products through this pipeline. An oil terminal is already under construction in Baku to complete this project. Another alternative route -the Baku-Tbilisi-Erzurum Pipeline- is being contemplated for the transfer of Baku’s gas to Turkey and Europe. The contract was signed just a few days ago between the oil ministers of Turkey and Azerbaijan on the sidelines of the CICA summit. Such projects will render moot the construction of Neka-Jask Pipeline.
Iran’s energy sector will probably go downhill with the new sanctions resolution adopted by the UN Security Council on June 9, 2010. Australia and the European Union have targeted Iran’s energy industry with unilateral punitive measures to bolster UN sanctions, while fresh sanctions are being approved by the US Congress and will only need Obama’s ratification. Kazakhstan and Turkmenistan have also decided to shift their oil transfer route from Iran to the Russian Port of Novorossiysk on Black Sea coast.
These developments seem to be a part of the Trans-Caspian plan which has been resisted so far by Iran and Russia. Moscow -always manipulative vis-à-vis Iran- may bypass Iran yet another time and side with the West on this issue. At a time when its energy industry is facing several problems, the optimal economic, technological, and political choice for Iran is to participate in the construction and use of these pipelines to bolster geopolitical and geo-economic relations with the Caucasus. Rising costs, falling profits, and a growing population dictate that Iranian decision-makers abandon fantasy and adopt practical, necessary plans.