Iran and Oman determined to build an underwater pipeline

Iran and Oman determined to build an underwater pipeline

Simone Cantarini (Agenzia Nova)
The first negotiations date back to 2005, then, in 2013, came the signing of the first agreement. The gas pipeline between Iran and Oman has encountered many blocks and restarts, but now, following the latest meeting between the energy ministers of the two countries, appears set to become operational from 2020

The gas pipeline between Iran and Oman could become a reality, four years after the framework agreement signed by Tehran and Muscat in 2013. This result also seems possible thanks to the partial growth of oil prices, occurring following the agreement between members of the Organization of Petroleum Exporting Countries (OPEC) and 11 non-OPEC countries, including Russia and Oman, signed on December 10, 2016 in Vienna. In recent days, the oil ministers of Iran and Oman, Bijan Zangeneh and Mohammed bin Hamad Al Rumhy, respectively, met in Tehran to discuss the feasibility plan for the infrastructure, which could become operational as early as 2020. As emphasized by the director of the department for exports of the National Iranian Gas Company (NIGC), Ali Amirani, various companies have submitted a series of proposals for the construction work: Total, Anglo-Dutch Royal Dutch Shell, South Korea’s Kogas, Germany’s Uniper and Japan’s Mitsui.

Muscat and its role as energy hub

Zangeneh, "The gas pipeline avoids the waters controlled by the United Arab Emirates and will go through the deep waters"

The meeting between Zangeneh and his Omani counterpart confirms the intention of both countries to conclude the agreement and build the infrastructure, which has a strategic importance for both countries. On the one hand, Iran will be able to export its gas from the North Pars gas field to the Omani port of Sohar, using the liquefied natural gas terminals of Qalhat, while, on the other hand, Muscat, in addition to meeting its domestic energy demand, will become a hub for energy exports, mostly to Asia, due to its geographic location - an improved hub compared with its Gulf competitors, such as the United Arab Emirates, Qatar and Saudi Arabia. During the press conference held after the meeting, the Iranian minister said that the change will have no impact on the cost of the infrastructure. ''The two countries have agreed that the gas pipeline for exporting gas will avoid the waters controlled by the United Arab Emirates and will cross via the deep waters'', said Zangeneh. The Iranian minister stressed that a conclusion could be reached as early as the end of February, noting that the procedures of mapping the deep waters will conclude within the next few months and an invitation to tender will be announced to select the company to be entrusted with the construction of the gas pipeline. Based on the agreement signed in 2013, Iran could export up to 28 million cubic meters of gas per day to Oman, via the underwater gas pipeline for 15 years. Approximately one-third of the exported gas will undergo a liquefaction process in the plants of the Omani complex of Qalhat, while the rest will be used for the Sultanate’s domestic consumption. The agreement has an estimated value of $60 billion, while the cost of the gas pipeline is expected to amount to $1.2 billion. According to the initial plan, the gas pipeline should be 400 kilometers long, with a surface section of 200 kilometers, between the city of Rudan and the town of Mobarak, in the southern province of Hormzgan; as well as an open-sea section of 200 kilometers to the Port of Sohar. The new route only affects the offshore part which, instead of deviating from the Iranian coasts into UAE waters, taking advantage of the uniformity of the approximately 300-meter deep seabed, will head directly to the port of Sohar, passing through a seabed over 1,000 meters deep.

With the new gas pipeline Iran will export its gas from North Pars fields to the Omani port of Sohar, while Oman will meet its energy demand and transform Muscat into a hub for export

An uncertain start

Like other massive infrastructure projects in the energy sector, the gas pipeline to Oman has had a troubled start, with interruptions, reconsiderations and frequent breaks in talks between the parties concerned. To meet its significant energy deficit, Oman had entered into negotiations with Tehran as far back as 2005, interrupted due to heavy U.S. pressure on the government of Muscat. Only in August 2013, a few weeks after the election of President Hassan Rohani, did the two countries sign an initial framework agreement. The negotiations received a new impetus with the Iranian President’s visit to Muscat in March 2014, when the two countries decided to speed up negotiations in order to postulate, in September 2015, the completion of the gas pipeline by the end of 2017. The UAE’s opposition, however, again froze negotiations that had already been put to the test by the collapse in oil prices. In April 2016, the two parties finally launched a series of deep sea investigations to assess the feasibility of the project and to establish a possible route.

Based on the agreement signed in 2013, Iran should export in Oman up to 28 million cubic meters of gas per day, for 15 years, through the underwater pipeline