TEHRAN Sept 21 (Shana)–Iran’s Deputy Petroleum Minister for International Affairs and Trading Ali Majedi is leaving Iran to serve as the Islamic Republic’s ambassador to Germany. In his last interview in this post, he speaks about Iran’s main gas projects.
Q: More than 13 years have passed since the issue of Iran’s gas exports to Pakistan and India came up. India pulled out of the project. Is there any hope for Iran’s gas to be delivered to Pakistan?
A: No gas will go to Pakistan up to the end of 2014 because no pipeline has been constructed in Pakistan’s soil. But Iran has said many times that it is ready to export gas to this country. They have now to build their own section of the pipeline and naturally as long as the pipeline has not been completed in Pakistan’s soil no gas will go to this country. They claim lack of finance due to sanctions, but that’s not acceptable. Of course they have already acknowledged during negotiations their interest in receiving gas from Iran and therefore Iran is waiting for Pakistan’s action. They offered solutions to accelerate gas delivery by Iran, but the Pakistani side has not made any assessment of the feasibility of the project.
Q: Under the contract, Pakistan should pay $200 million in penalty every month to Iran for delaying the construction of the pipeline and the deadline for the project is December 31, 2104.
A: When one party or both are not happy with the process of work, it could be referred to international arbitration. It is not so that Pakistan will have to pay the cash fine if the pipeline is not constructed. There is no such clause in the contract. Iran’s gas exports to Turkey also went to international arbitration and this project could be dealt with accordingly. International arbitration is not Iran’s priority because Iran prefers that the Pakistanis will be able to finance the pipeline and build it. More serious talks need to be held with them and the Pakistanis should not delay the construction of the pipeline until the removal of sanctions. They should try to remove the obstacles they have already noted and that would be a step ahead. But Iran is waiting to see how Pakistan will act.
Q: Will Iran help Pakistan build its own section of the pipeline?
A: Iran cannot help them in financing the pipeline due to the current conditions in that country. Of course under the previous administration [of Iran], the two governments [had] signed an agreement which was never executed. Therefore, financing the Pakistani section of this pipeline is up to the Pakistanis themselves.
Q: Iran is facing restrictions with regards to financing its joint oil fields. Why should Iran try to speed up the project while the Pakistanis have taken no action?
A: The Pakistanis say incessantly that they really want to receive Iran’s gas, but if they decide to forego the project the pipeline could be used for other purposes too. However, a major part of this pipeline – more than 80 percent – has already been built in Iran while Pakistanis have not started their work yet as they have done only 5% of the work. There is a big difference between our work and theirs.
Q: Construction of the pipeline started in 2008. Iran saw that Pakistan does not make any progress in its pipeline. So why did it continue to build its own section?
A: Iran’s section is 1,250 kilometers and Pakistan’s is 780 kilometers. Iran should have started much sooner. The previous administration should have classified the projects based on their priority.
Q: Is the export of gas to India history for Iran?
A: The Indians have shown willingness to receive gas from Iran and the best way would be through Pakistan. But they thought twice and they want LNG from Iran.
Q: But Iran will have no LNG to offer at least for three years.
A: The Indians have proposed a subsea pipeline, but nobody has followed up on it seriously.
Q: Have there been any negotiations for more gas exports to Turkey?
A: Gas export is a national plan. Increasing gas exports to Turkey and Europe either in the form of LNG or through pipeline should be viewed as a single case. Due to its strategic position, Iran has alternatives for gas exports. Therefore, there should be flexible program in this regard so that the demands of both parties with regards to regional and international conditions are met. Gas production and exports are on the agenda of Petroleum Ministry and the South Pars phases are being developed quickly. Iran will have surplus production which could be exported. There is the possibility of gas storage in the country and therefore nobody should fear that Iran will have to stockpile its gas. Enhanced gas production capacity will boost Iran’s bargaining power and flexibility in the world.
Q: Don’t you think that Iran’s gas is sold at much higher prices than Russia’s and Azerbaijan’s to Turkey?
A: The gas price depends on the market and its share of the market. When the gas share is low in the market the price goes up. Therefore, the price depends on the amount too. When more gas is exported the gas price is modified, like other commodities. Therefore, access to market is important. Moreover, other factors are also important in gas contracts.
Q: China is Iran’s top trading partner, but this country has become unreliable due to its bad performance like in the development of Azadegan field. What do you think about the future of Iran-China relations?
A: Iran and China are structurally complementary, but the trade ties between the two countries can expand. Sinopec does not have a brilliant record in Yadavaran project, but it has been acceptable. But CNPCI was behind the schedule and it ignored warnings by the National Iranian Oil Company and the contract for the development of Azadegan with this company was terminated at the order of Petroleum Minister Bijan Namdar Zangeneh.
Q: You’re designated to serve as Iran’s ambassador to Germany. How will you remain in touch with oil?
A: When I was serving as Iran’s ambassador to Japan, the contract for Azadegan – one of the most important upstream oil projects – was signed and I was in good contact with petroleum industry. I will make efforts in Germany to convince the Germans to participate in the [development of] oil and gas fields in Iran. Iran’s petroleum industry depends on Germany in some sectors. I have plans in my mind about Iran selling oil to Germany or Iran’s gas exports to Germany.
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