Reuters: Iran's attraction as an alternative source of gas supply to Europe is slowly gaining momentum following a crisis over Russian gas supplies in January, top industry oil executives said on Wednesday.
By Luke Pachymuthu
ABU DHABI, Feb 11 (Reuters) – Iran's attraction as an alternative source of gas supply to Europe is slowly gaining momentum following a crisis over Russian gas supplies in January, top industry oil executives said on Wednesday.
A price dispute between Russia and Ukraine last month shut the transit route via which Europe receives a fifth of all its gas, and led to the most serious supply disruption for years.
"What we have finally learned in Europe this January is that Russia proved to be an unreliable supplier, it was a very hard lesson for us," said Vaclav Bartuska, a Czech energy security official, on the sidelines of an energy conference in Abu Dhabi.
"But we can live without gas from Russia, and while it will be costly, complicated and expensive and could take up to 10 years we can still do it," he told Reuters.
Bartuska said the options for Europe were either Qatar, the world's largest LNG exporter with the capacity to produce 38 million tonnes per year, or Iran which sits atop of the world's second largest gas reserves next to Russia.
Royal Dutch Shell, which delayed decisions on multi-billion dollar investments in Iranian liquefied natural gas (LNG) plans last year due to political tension, also sees Iran as an alternative supply source.
"With Iran's enormous reserves, Iran will be an important player in the region and in Europe," said Martin Trachsel, vice president at Shell's Gas & Power unit in the Middle East.
Iran has not yet exported any LNG but says it will be able to produce 77 million tonnes a year by 2014, more than double Qatar's output after nearly two decades of steady investment.
Companies like Spain's Repsol with large investments in Iran's energy sector remain cautiously optimistic.
"For us at the moment the Persian LNG project is very important, and we are continuing to talk with the NIOC (National Iranian Oil Company) and Shell about moving the project forward," said Mauricio Mariaca, a Repsol LNG deputy director.
Repsol, Shell and NIOC signed an initial deal in 2002 to develop Phase 13 in the Persian LNG project.
"The project is important to us because it will give us a presence in the Middle East, we are already established in the Atlantic Basin, and in the Pacific with our project coming up in Peru."
Bartuska said that despite the sensitive political relations between Iran and the United States, Iran remained a viable supply source for European countries.
"We will continue to keep the line with the US on Iran, but we will do it only as long as it is viable for us," he said.
For eight-years, the administration of former President George W. Bush pressured countries or companies that wanted to secure energy deals in Tehran to keep out, as the United States looked to isolate Iran over its controversial nuclear programme.
Washington's sanctions have barred U.S. firms from investing in Iran's oil and gas sector since 1995 and include provisions to deter companies from other countries.
But relations could start to thaw as the recently elected President Barack Obama has offered direct talks with Tehran.
"Hopefully we will see the political tensions between Iran and the US improve because international oil companies are struggling to get their access to natural resources, and would love to look to Iran as an option", said Michael J. Corke, vice-president of consultancy Purvin and Gertz.
(Editing by Guy Dresser)