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Monday, November 29, 2010

Second Phase of Iran-Turkmenistan Gas Pipeline

Iran and Turkmenistan started the second section of gas pipeline which will help Turkmenistan diversify exports away from Russia and boost Tehran's ambition to bypass foreign sanctions by becoming a gas hub.

The $1.2 billion has been invested in the project. A 500-kilometer long pipeline with a diameter of 48 inches began operating earlier this month and will eventually double Iran's imports of Turkmen gas to 20 billion cubic meters a year.

The first phase of the 1024km pipeline came on stream in January 2010 to deliver gas from the Turkmenistan's Dovletabad field to Iran's Khangiran refinery.

The second nationwide north and northeastern gas transport pipeline and the second section of the second Iran-Turkmenistan gas transport pipeline connects Iran's gas network to six neighboring countries: Iraq, Turkey, Pakistan, Turkmenistan, Armenia, and the Republic of Azerbaijan, as well as Persian Gulf.

Despite having the second largest gas reserves in the world, Iran's own production of 600 million cubic metres per day barely meets domestic consumption. Also, Iran is the world's fifth largest oil exporter.

At a ceremony in the Iranian border town of Sarakhs, Iranian President Mahmoud Ahmadinejad told an audience which included Turkmen leader Kurbanguly Berdymukhamedov that he hoped for closer energy ties with Turkmenistan. Iran are ready to extend cooperation toward the implementation of whichever choice they make in regard to their gas.

Iran has been hit by United Nations, US and EU sanctions over its disputed nuclear program, which the United States and its allies say is a cover to build bombs. Iran says its nuclear work is aimed at generating electricity. By increasing imports from Turkmenistan, Iran hopes it can export more of its own gas and become a regional hub for gas.

"In May the country needed around $25 billion a year in oil and gas industry investment to meet its target development goals because sanctions have frightened away international energy firms", Iran's Oil Minister said.

The Sarakhs-Tehran pipeline would also allow Iran to become a regional "gas hub," by increasing its gas swap capacity with neighbours and having Central Asian gas transit through its territory to Europe.

The geographic and geopolitical position of Iran for exporting, transiting and swapping energy to east Asian and European countries will make the country the regional gas hub in the future.

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