Russia and Iran are building the foundation for a potential natural gas cartel.
The Russia-Iran alliance aims to control as much of the two key elements in the global supply matrix as possible.
“Gas is widely seen as the optimal product in the transition from fossil fuels to renewable energy, so controlling as much of the global flow of that will be the key to energy-based power over the next ten to twenty years", according to a senior source who works closely with Iran’s Petroleum Ministry.
The US$40 billion memorandum of understanding (MoU) signed last month between Gazprom and the National Iranian Oil Company (NIOC) is a stepping stone to enabling Russia and Iran to implement their long-held plan to be the core participants in a global cartel for gas suppliers in the same mold as the Organization of the Petroleum Exporting Countries (OPEC) for oil suppliers. With a foundation in the current Gulf Exporting Countries Forum (GECF), this ‘Gas OPEC’ would allow for the coordination of an extraordinary proportion of the world’s gas reserves and control over gas prices in the coming years. Occupying the number one and number two positions in the world’s largest gas reserves table, respectively – Russia with just under 48 trillion cubic meters (tcm) and Iran with nearly 34 tcm – the two countries are in an ideal position to do this.
The Russia-Iran alliance, as evidenced in the most recent multi-faceted MoU between Gazprom and the NIOC, wants to control as much of the two key elements in the global supply matrix – gas supplied over land via pipelines and gas supplied via ships in liquefied natural gas (LNG) - as possible. According to a statement last week from Hamid Hosseini, chairman of Iran’s Oil, Gas, and Petrochemical Products Exporters’ Union, in Tehran, after the Gazprom-NIOC MoU had been signed: “Now the Russians have come to the conclusion that the consumption of gas in the world will increase and the tendency towards consumption of LNG has increased and they alone are not able to meet the world’s demand, so there is no room left for gas competition [between Russia and Iran].” He added: “The winner of the Russia-Ukraine war is the United States, and it will capture the European market, so if Iran and Russia can reduce the influence of the United States in the oil, gas and product markets by working together, it will benefit both countries.”
The Gazprom-NIOC MoU, as initially analyzed by OilPrice.com, contains four key elements that are geared towards the build-out of a ‘Gas OPEC’.