Ardeshir Dadras, president of Iran’s Compressed Natural Gas (CNG) Association, has claimed that an apparently behind-closed-doors arrangement with Russia is blocking the Islamic Republic from extracting gas from the Caspian Sea.
"According to a previous agreement with Russia,” Dadras told ILNA News Agency on Monday, November 1, “Iran has no right to extract from eight large gas wells in the Caspian Sea, which are within Iran's waters. The agreement says that as long as Iran’s gas balance is positive and production is commensurate with domestic consumption, we cannot extract Caspian gas resources. Therefore, we shouldn’t be thinking about the gas resources of the Caspian Sea for the time being."
As if this were not eyebrow-raising enough, the president of the CNG went on to explain: “Russia holds 18.1 percent of the world's gas reserves, and the figure is 17.9 percent for Iran. If we extract gas from the Caspian Sea, [Iran’s share] will become 18.2 percent and we’ll be in a higher position than Russia, which according to previous agreements with this country, should not happen, so that Russia remains in the lead."
The Caspian Sea was formerly shared between Iran and the Soviet Union. After the collapse of the latter in December 1991, Iran and Russia found themselves with three new neighbors, namely the Republics of Azerbaijan, Turkmenistan and Kazakhstan, each of which also claimed a share of the territory. Nearly decades later in 2018, the five littoral states of the Caspian Sea reached an agreement on how to divide up its energy resources. But this has yet to be implemented properly and behind the scenes, the negotiations are still going on.
Until the complete division of the Caspian Sea bed is complete, the littoral states must refrain from extracting energy resources in disputed fields or encroaching on areas held by their sovereign neighbors. But they are not barred from exploiting their own oil and gas fields, in areas over which there is no dispute.
Both Azerbaijan and Turkmenistan are already making extensive use of their oil and gas resources in the territory. Through bilateral agreements, they have settled their own disputes over the common fields, and are currently negotiating the laying of a pipeline through Azerbaijan to allow Turkmenistan’s natural gas to reach Europe. Neither has any reason to seek permission from Iran, Kazakhstan or Russia for these activities.
Iran has extensive oil and gas fields in the Caspian Sea. But the exploitation of these resources is more expensive for the Islamic Republic than the other four states, and it stands to profit less. The deepest part of the Caspian Sea is close to 1,000 meters deep and located to the south, in Iran’s share. Drilling for oil and gas is harder here than in the north, where in some areas the depth is just five meters. As such, market conditions must be such that Iran stands to make a profit from this more complex extraction.
Twenty years ago in May 2001, Tehran hosted the first meeting of what was to become the Gas Exporting Countries Forum: an umbrella organization not dissimilar to OPEC in which Russia has a major stake. Member states naturally have arrangements on local production levels so as to keep the price of gas exports fair, but there is no reason this ought to violate individual states’ sovereignty. If what Ardeshir Dadras said was correct, it appears the Islamic Republic has – separately – put itself into a position where it needs the Kremlin’s permission to exploit its own resources.
Officials of the Islamic Republic of Iran should immediately clarify the provisions of any undisclosed commitments made to Russia, as announced by Dadras. Iranians also deserve to know what, if anything, was asked of Russia in exchange. The latter’s actions in the Caspian Sea have repeatedly endangered Iran's national and historical interests in the past, and if any concessions were extracted from the Islamic Republic in a manner that could be considered coerced, according to international law it is void and can be terminated.