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Nuclear Deal Fallout
Sanctions-Free Iran Both Opportunity and Threat to Russia

As the West prepares to roll back sanctions on Iran as part of the proposed nuclear deal, energy markets are looking at the prospect of a flood of new supplies of oil and gas. Politico reports that Iranian gas could be a big opportunity for Moscow:

…Iran’s reopening presents Russian companies such as Gazprom and Lukoil, which have been there before, with the chance put money into potentially lucrative new projects, including oil and gas production, pipelines, petrochemicals, nuclear energy, and, eventually, even liquefied natural gas (LNG) exports.

“There may be a bigger convergence of business interests between Russia and Iran now, given that Russia is being increasingly sidelined by Europe,” said Ellie Geranmayeh, an Iran expert at the European Council on Foreign Relations.

But that opportunity is also a way for Moscow to mitigate the threat that Tehran poses to its global market share:

“It’s really about securing a market share for Gazprom,” [Valentina Kretzschmar, director of upstream corporate research at the energy consultancy Wood Mackenzie] said. “Russia would be better-positioned to protect its market share if it has a position in Iran. It’s all about controlling that gas; it’s a global market share whether the gas goes to Asia or to Europe.”

Russia and Iran are both petrostates that, if sanctions are lifted, will once again have a vested interest in the European market. Because both produce a similar grade of crude, Moscow stands to be the biggest loser when Tehran returns to the scene—after all, it was largely Russia that stepped in to supply Europe when sanctions took effect in 2011.

So while Gazprom and Lukoil stand to gain productive new investments with the removal of Iranian sanctions, their involvement will smack of the can’t-beat-’em-join-’em adage. Both countries will be looking to out-muscle the other to ply their wares in an increasingly crowded global market.

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  • Dhako

    It’s actually, other way around. Meaning, knowing that the US can any minute reimpose a unilateral sanctions on Iran (particularly if any of the GOP’s presidential contenders were to win the US presidency come 2016) then it’s utmost important that the Iranians to make to the Russians and to lesser extent, the Chinese a “sweet deal” that will allow both of these countries to see as their interests that what ever Israelis supporting mendacity any GOP president cobbled together (after 2016, if by then the GOP found themselves running the show in Washington) should not be given any impromptu of international legitimacy at the UNSC.

    Hence, Iran’s elites will bent backward to accommodate the interest of Russia and China, to the extend that Russians companies will be given a lucrative “equity” in the future development of the Iranian’s oil fields, which in turn could “compensate” the Gazprom in whatever diminution of market share she is likely to lose in the events of the Iranians oil coming back to the market.

    Subsequently, it may make you to gnash your teeth in frustration (as a proud Neo-Con’s intellectual) particularly when you see how Russia and Iran, are likely to see eye-to-eye with each other in a much more meaningful way than each of them is likely to do with a US, much less of a US led by a head-banging Lukid-bought-and-Pay-for GOP president. But, the fact of the matter is that Russia and Iran, will simply see that it’s to their interest to cut a “two-way-lucrative-deal” with each other, going forward.

    So, in that sense, once Iran come in from the cold on the back of this deal, then knowing how strategically Iran will always lean on China and Russia as a “protective mountains”, or at least as “insurance policy” to protect herself against any US-inspired back-peddling of the current re-engaging of Iran as a responsible power, will simply mean that on top of Iran being a member of the SCO (which is an organization led by China and Russia) Iran will always “defer”, strategically and economically, to China and most importantly, to Russia.

    So, I do not see the dark merit-less prognosis you are prophesying for Russia on the back of the Iranian’s oil return to the international market, once the sanctions are completely gets lifted.

  • Fat_Man

    Far worse that the market competition that Iran would create for Russian oil, is Iran’s ability to stir up trouble in the Muslim areas of Russia such as Chechnya. Putin may believe that he has pacified those places, but unless and until he either ethnically cleanses the entire area or forcibly and permanently converts them to Christianity, trouble will always reoccur. Islam’s bloody borders are not an accident. And Iran is always poised to stir the pot. To the Ayatollahs, Putin is just another kufir, a useful one now, but eventually doomed.

    Further, once Iran has Nuclear weapons, Moscow is a lot closer to Iran than is Washington.

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