Gas and Hot Air
by mahmood on 28/09/07 at 6:27 pm · email · print
Manama and Tehran are edging closer to an agreement that will see Iran become a major supplier of natural gas to Bahrain, helping to fuel the country’s programme of industrial expansion and diversification.
If all goes according to plan, Bahrain could be receiving shipments of Iranian natural gas as early as 2012, via a pipeline that is to be laid beneath the Gulf.
On September 23, Abdul-Hussain Mirza, Bahrain’s minister of oil and gas affairs and head of the national authority of oil and gas, announced that a second round of negotiations on the project would be held in Tehran in October.
According to Mirza, it is not so much a question of whether Bahrain will import gas from Iran, but rather how the project will be funded and operated.
“Both sides are studying the best way to facilitate the import whereby either Bahrain would invest in the Iranian oilfields in co-operation with an international firm and would be provided with gas in return or it would import the gas directly,” he said.
Talks between representatives on the joint Bahraini-Iranian technical committee established to shape the project should be completed within a year, with the laying of the pipelines linking the two countries expected to take another three or four years, Mirza said.
A first round of talks, held in early September in Manama, described as a success by Mirza, focused both on the plan to import Iranian gas and on ways to facilitate Bahrain’s investments in Iranian oil and gas projects.
Newly appointed Iranian Ambassador Hossein Amir Abdollahian has flagged Tehran’s enthusiasm for the project. After presenting his credentials to King Hamad bin Isa Al Khalifa on September 15, Abdollahian said his country was ready to expand its economic ties with Bahrain and push forward with discussions on energy co-operation.
With the talks still in the early stages, there has been no finalising of details such as how much gas will be shipped to Bahrain, or of the cost for the project’s infrastructure and who will be doing the paying.
‘It is too early to estimate the price of Iranian gas,” said Mirza on September 15. However, in later statements to media, the minister said he did not see any obstacles to reaching a final agreement some time next year.
That the project to import Iranian natural gas has advanced so quickly is a triumph of real politic over politics, with relations between Tehran and Manama having been decidedly strained only a couple of months ago.
A claim made in the Iranian press by Hossein Shariatmadari, a close advisor to Iran’s supreme leader Ayatollah Ali Hosseini Khamenei and editor or an Iranian daily, that Bahrain was a province of Iran and should be reunited with the “native land” provoked understandable outrage in the kingdom.
The article, published on July 9, saw a flurry of diplomatic activity, with Iranian Foreign Minister Manouchehr Mottaki dispatched to Manama to douse the flames.
However, Mottaki’s visit did not forestall large protests outside the Iranian embassy in Manama, or a wave of articles in the Bahrain media lambasting Tehran for having expansionist policies.
On the other side of the Gulf, Mottaki’s visit to Bahrain also came under fire, with hard- line parliamentarian Daryoush Ghanbari describing the apology tendered by the foreign minister an affront to Iran’s national dignity.
Affront or not, economic rationalism played its part in the smoothing of ruffled feathers. Amidst assurances of mutual respect and admiration at the meeting between Bahraini Foreign Minister Sheik Khalid bin Ahmed Al Khalifa and his Iranian counterpart, the issue of gas imports also got a mention.
“Holding a joint economic commission meeting after the fasting month of Ramadan and establishing a committee to finalise the gas purchase project from Iran are appropriate grounds to expand mutual ties,” Sheikh Khalid said. “Manama seriously intends to expand ties with the Islamic Republic of Iran and strengthen opportunities and brotherly ties between the two countries.”
The proposal to import Iranian gas is part of Bahrain’s plan to secure its long-term energy needs. The country’s own gas and oil reserves have only a limited lifetime, with current oil production no longer sufficient to meet its requirements.
While it still has gas reserves sufficient for the immediate future, with unofficial estimates putting stocks at around 92bn cu metres, and is still conducting further exploration off its shores to identify new stocks of gas and oil, the ambitious programme of economic diversification requires supplies to be locked in for the decades to come.
OBG – Bahrain – Volume 122 – 28 Sept, ’07
