Russia, Iran, To Work On Gas Pipeline With Capacity Greater Than Russian Supplies To Europe

The Russian President, Vladimir Putin, has been discussing the development of a natural gas pipeline from Russia to Iran, stating that while the project will be implemented despite some difficulties, it will go ahead. Putin was speaking following talks with Iranian President Masoud Pezeshkian in Moscow on Friday (January 17).

Putin said that “Speaking of possible supply volumes, we think it necessary to start with small volumes, below 2 billion cubic meters, while this could reach volumes of 55 billion cubic meters of gas per year. Oil is another possible area of cooperation.”

The 55 billion cubic metres of gas per annum is significant, and in volume terms would mean that Iran would be receiving more Russian gas than the entire European Union. The EU, despite sanctions and calls for the import of Russian gas to be stopped, actually imported 49.5 billion cubic meters (bcm) of Russian gas in 2024. The impact of this would be substantial as it would provide a massive boost to the Iranian manufacturing sector and its productivity – itself under significant sanctions. Interestingly, it would also reduce Tehran’s need to develop a nuclear power industry, something the United States is vehement about not happening – and itself a major driver of Iranian sanctions. The longer-term implications are that some European manufacturing could migrate to Iran to take advantage of more competitive production costs.

The Russia-Iran pipeline project is not without acknowledged difficulties. Putin also stated that “In regards to this project, and the North-South Transport Corridor, there are always issues to agree on and take account of a situation forming in this economic sector in logistics, transportation, and energy.”

Putin referenced that for example the two sides have different approaches to agreeing on a price, in particular, the question of the calorific value of energy resources, saying “but these are technical issues, they are being dealt with. But the projects are in the works, are very important, very interesting. We are working on a premise that they will be implemented.”

The Iranian President, Masoud Pezeshkian said “We are convinced that we can do it. And we must remove any obstacles to prevent them in the future, for the supply route to be drawn up and able to operate at full capacity. Of course, there is a number of technical issues to be resolved but we will overcome these.”