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.