“Further sanctions on Iran unlikely to impact world gas market”

Posted on October 7, 2012


It is unlikely that further sanctions on Iran would have a major impact on the world gas market, Senior fellow at Nanyang Technological University’s S. Rajaratnam School of International Studies, James M. Dorsey believes.

The European Union is poised to ban imports of Iranian gas into Europe as part of its efforts to ratchet up pressure on the Islamic Republic over its nuclear programme, diplomats said recently, according to Reuters.

Iran, being world’s second country by natural gas reserves after Russia, is suffering already from the sanctions that have impacted its oil exports.

“Iran is already finding it difficult to export and that many of its clients have sought alternative suppliers,” Dorsey said.

Diplomats from EU member states have started preparing a package of sanctions against Iran with a goal of formally adopting them at a meeting of foreign ministers on Oct. 15 in Luxembourg.

Earlier this week, they reached a preliminary deal to ban gas imports, the first measure to win approval in the package, which also consists of various finance and energy-related proposals, three EU diplomats said.

“There is agreement on gas,” one of the diplomats said, speaking on condition of anonymity. “The big states back it, Germany, Britain, France,” another diplomat said.

The moves come as European governments and the United States are searching for new ways to pressure Tehran into scaling back its nuclear work after diplomacy foundered earlier this year. Tehran denies its work has any military intentions.

The United States, since 1995, has banned U.S. firms from investing in Iranian oil and gas and from trading with Iran.

The European Union has been much slower to ban Iranian energy. It imposed an embargo on Iranian oil this year, after banning the creation of joint ventures with enterprises in Iran engaged in the oil and natural gas industries in 2010.

Existing sanctions cover investment in Iranian gas, but do not specifically outlaw imports, which are insignificant In terms of volume, but symbolic. The EU sources said Iranian crude reaches Europe via Turkey, and ships it on from there.