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Russia and Iran Join Forces to Create World's Largest Natural Gas Cartel

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Pavan A Follow

INDIA

Aug, 31 2022

Aug, 31 2022

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Gazprom and the National Iranian Oil Company (NIOC) signed a memorandum of understanding (MoU) last month worth US$40 billion which is the first step toward Russia and Iran implementing their long-held plans of becoming key participants in an oil-based cartel similar to the Organization of Petroleum Exporting Countries (OPEC). 

 

Essentially, the alliance between Russia and Iran aims to have the majority of control over the two key elements in the global supply matrix as much as possible- pipeline delivery over land and LNG delivery by sea. 

 

An Iranian official who works closely with the ministry of petroleum said, “Gas is widely seen as the optimal product in the transition from fossil fuels to renewable energy, so controlling as much of the global flow of that will be the key to energy-based power over the next ten to twenty years." 

 

The 'Gas OPEC' based on the GECF (Gulf Exporting Countries Forum) might be able to control gas prices in the future and coordinate large amounts of world gas reserves. Two countries, in particular, are in a very advantageous position to accomplish this - Russia with 48 trillion cubic meters (TCM) and Iran with nearly 34 TCM of gas reserves. 

 

Russia and Iran's alliance aims to convince other major producers to support the Gas OPEC in the Middle East region, who are currently undecided between Russia-Iran-China and the U.S.-Europe-Japan alliance.? 

 

Russia, Iran, and Qatar hold nearly 60 percent of the world's gas reserves, and these three countries contributed significantly to the GECF's establishment.? 

 

The fact that Qatar shares with Iran a 9,700 square kilometer gas reservoir makes it a prime candidate for such a cartel since it has the world's third largest gas reserve and largest LNG supply. 


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Pavan A

CBW - External Analyst

INDIA

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