MUSCAT, Oman–The Sultanate of Oman is positioning itself to broker Iran’s natural gas sales to the rest of the world, including Japan, if, and when, international sanctions over Tehran’s nuclear ambitions are eased.
A preliminary accord was reached in November, whereby the United States, Britain, Germany, France, China and Russia agreed to ease sanctions on Iran for six months if Tehran agreed to temporarily freeze its nuclear program.
In a move seen by some as using great foresight, the Sultan of Oman, Qaboos bin Said, signed a memorandum to lay an underwater pipeline across the Strait of Hormuz to Iran and to purchase $60 billion (6.3 trillion yen) worth of natural gas over 25 years from 2015.
The agreement was signed during a visit to Tehran in late August soon after Hassan Rouhani assumed Iran’s presidency, and three months before Iran reached the preliminary sanctions-busting deal.
Oman’s interests coincided with those of Iran, which is eager to begin exports to redevelop its gas resources and infrastructure, which suffered under the sanctions. The Iranian ambassador to Oman told a local newspaper that half of Iran’s exports to Oman will be re-exported to Japan, South Korea and India.
Iranian gas exports face the risk of coming under sanctions once again should the nuclear talks grind to a halt. But energy industry insiders are talking about a “gas laundering” scheme, whereby Oman domestically consumes gas imported from Iran and uses local gas production for exports.
While Oman, with a population of just 2.8 million, is a gas-exporting country, it is expected to experience gas shortages due to population growth and greater domestic consumption. And the country’s liquefaction plants for gas exports are not currently operating at full capacity.
Oman has traditionally maintained friendly relations with both the United States and Iran. Qaboos mediated the release of three U.S. citizens held by Iran in 2009. In addition, senior officials from Washington and Tehran have reportedly met secretly over the nuclear issue as many as five times since March, mostly in the Omani capital of Muscat, with Oman acting as the intermediary.
It has also opposed neighboring Saudi Arabia’s containment policy toward Iran. Riyadh has expressed great concern over Iran’s recent nuclear activity. The Sunni and Shiite nations are traditional rivals.
Oman is a member of the Gulf Cooperation Council, an alliance of six Sunnite states in the Persian Gulf region.
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