Iran's Caspian Gas Field, And Russia’s Share, ‘Far Bigger Than Expected’
The lucrative Chalous gas field in the Caspian Sea looks increasingly to be at the center of discussions underway over an Iran-Russia 20-year cooperation deal.
The lucrative Chalous gas field in the Caspian Sea looks increasingly to be at the center of discussions underway over an Iran-Russia 20-year cooperation deal.
In June, Iran’s Khazar Exploration and Production Company (Kepco), then touted as the field’s main developer, suggested the field held 30 percent of the developable natural gas reserves of all Caspian Sea littoral counties and could potentially meet 20 percent of all European demand for gas.
But those figures may need revising, upwards - a point well grasped in Moscow. According to Simon Watkins, of Oilprice.com, further studies have revealed that the field has far more reserves than previously thought, with a total 7.1 trillion cubic meters, fully half the reserves of South Pars, Iran’s huge field in the Persian Gulf.
Watkins reported Monday that this has led to a revised understanding, during the Tehran-Moscow cooperation discussions, that would see for 20 years 40 percent share of output go to Russia’s Gazprom and Transneft, 28 percent to China’s CNPC (China National Petroleum Corporation) and CNOOC (China National Offshore Oil Corporation), and only 25 percent to Iran’s Kepco. This division (more on the missing 7 percent below) would apply even though the field falls within Iranian sovereignty.
Such an agreement, Watkins suggested, would enable Russia to head off any potential challenge to its own place in the European market – while presumably keep up gas prices to both Russia’s and Iran’s benefit – posed by a new supply of Iranian gas if US sanctions ended.
The advantages for Iran would be bringing in Transneft for transportation, CNPP for financing, CNOOC for infrastructure and engineering, one source told Watkins. The deal would also give Iran some level of Russian political support internationally, including in future issues over Iran’s nuclear program and its 2015 nuclear deal with world powers, the JCPOA (Joint Comprehensive Plan of Action).
And the pot is large. With Transneft reporting to Moscow that latest research suggests Chalous could supply 52 percent – rather than 20 percent – of Europe’s needs over the 20 years of the agreement, the financial benefits to Iran would be significant. A 28 percent share of a gas field potentially worth $450 billion over 20 years would be $5.6 billion annually or a total of $112 billion.
IRGC ‘real management’
Such benefits could be particularly useful, Watkins suggested, for “hydrocarbons companies closely associated with the Revolutionary Guards Corps (IRGC)” that would exercise the “real management” over the Iranian operation and would scoop the missing 7 percent from the carve up. Once the 20-year agreement ended, remaining exploitation of Chalous would lie with the IRGC construction arm, Khatam-ol Anbia, leaving it the lion’s share of a total value of the field now put overall at a staggering $5.4 trillion.
Imponderables remain. There has been talk of European investment in the field – but this would surely depend on the easing of United States sanctions that drove out of South Pars operators like Total, a world leader in offshore gas and in liquefaction.
And while Russia and China are both increasingly evading US sanctions, including through reducing dollar-denominated trade both bilaterally to under 50 percent and around the Shanghai Cooperation Organization, it is hard to see Chalous field developing its real potential and fully tapping European demand with stringent US sanctions in place.
Complications might also arise in domestic Iranian politics, where government critics may denounce a diminution in sovereignty and loss of resources. If either proves a bitter pill to swallow, the taste will not be sweetened by Watson’s calculation that the new Chalous figures when counted as sovereign Iranian assets − with allowance made for Russia’s own figures being out of date − mean Iran has now the world’s biggest gas reserves.
Jonathan Karl’s Betrayal: The Final Act of the Trump Show, released today, describes a November 12, 2020 meeting, shortly after the disputed November 3 election, when Miller talked through with Trump and top officials a response to an International Atomic Energy Agency report. The IAEA warned that Iran had increased its stockpile of enriched uranium to the point where it could make enough weapons-grade uranium for two bombs within six months.
Trump turned to Miller, according to Karl’s book, and asked if Iran’s nuclear sites could be taken out from the air. "Yes, Mr President," replied Miller. "We can absolutely do that."
But 100 manned flights would be needed, given Iran’s air defense, and “three, four or six planes” would probably be shot down, Miller told Trump. “I just want to make sure you are comfortable with that.” Trump was worried about things going wrong, especially Boeing’s involvement in air-to-air refueling as “they can't build s**t anymore."
Miller’s tactic worked. An alarmed Mike Pompeo, the secretary of state, phoned Bill Barr, the attorney general, to get him onside.
"I would play the f***ing madman," Miller told Karl. "And everybody else would be like, ‘All right, he’s the new guy. He's fucking insane…I have found oftentimes with provocative people, if you get more provocative than them, they then have to dial it down.”
The Trump emerging in Karl’s account is unpredictable and ignorant – but a man consistently skeptical of force and committed to withdrawing US troops from foreign theaters, an aim more common among the left of the Democratic Party than amid right-wing Republicans.
The writing had been on the wall for at least a year. Trump had in 2018 withdrawn from the 2015 Iranian nuclear deal and imposed ‘maximum pressure’ sanctions that he and apparently Pompeo believed would force Iran into broad concessions over its missile and nuclear programs and to curb its regional alliances.
Ten minutes to go
But did Trump have a plan B? A long piece in the New York Times in September 2019 highlighted Trump’s June 20 decision not to retaliate against Iran for shooting down a US surveillance drone. With ships aiming Tomahawk missiles, jets in the sky, and 10,000 sailors and airmen mobilized, Trump called of strikes with ten minutes to go after being told 150 Iranians would die.
The Times argued that the “about-face, so typically impulsive, instinctive and removed from any process” was a turning point in Trump’s presidency, one that
“was taken by Iran as a sign of weakness, emboldening it to attack” Saudi oil facilities at Buqaiq and Khurais in September 2019.
Trump’s response to the Buqaiq-Khurais attack – in which Iran denied involvement – was just to tighten financial sanctions.
But the Times even before that attack had noted that “as eager as he is to fight with 280 characters on Twitter, Mr Trump has proved profoundly reluctant to fight with live ammunition on a real battlefield.” The paper highlighted the influence on Trump of Fox News, especially presenter Tucker Carlson, always keen to remind the president he had been elected to stop wars, not start them.
Not ready to respond
In a meeting in Congress over the drone shooting down, Trump, according the NYT piece, “rambled on about how bad Mr Obama’s deal [the 2015 nuclear agreement] had been and insisted over and over again …that his pressure campaign would force Iran to the bargaining table. He seemed less certain about what to do in response to the drone shootdown.”
The picture emerging from Karl’s Betrayal: The Final Act of the Trump Show confirms the NYT portrayal. Trump essentially repeated a mistake made by Barak Obama in failing to act in 2013 when President Bashar al-Assad apparently crossed a “red line” set by Obama over the use of chemical weapons.
In that sense, Miller’s “f***ing madman” act had more sense than the president’s responses. “Trump is in a box of his own making,” Philip Gordon, a Middle East adviser to Obama, told the Times in 2019. “He has put in place policies…guaranteed to provoke an aggressive Iranian response, but he’s not prepared to respond aggressively in turn, and the Iranians know it.”