The Latest from Iran (6 July): Compromise?

2047 GMT: Today's All-is-Well Alert. Press TV plays up the statement of the head of Iran's Trade Promotion Organization that, despite UN sanctions, non-oil exports have grown 27%.

No word in the statement on how oil exports are doing.

Iran & Sanctions: Could Tehran’s Flights Be Grounded?
Iran Analyses: A Rafsanjani-Khamenei Deal on Universities Crisis? (Siavashi and Verde)
The Latest from Iran (5 July): Talks and Conflicts

2045 GMT: Energy News. Iran has finally put out a major oilwell fire which had been raging for 38 days.

2040 GMT: Parliament v. President. Kalemeh has more information on today's attack by legislator Ahmad Tavakoli (see 1230 GMT) on the Government and his claim of Mahmoud Ahmadinejad's lack of respect for the law.

1705 GMT: Political Prisoner Watch. Journalist Sasan Aghaei, held from November to April with 40 days in solitary confinement, has been given a one-year prison sentence.

1500 GMT: Parliament v. President. "Conservative" member of Parliament Reza Akrami has issued another denunciation of the recent demonstrations against the Majlis and its bill on control of Islamic Azad University: "Those who insult the Majlis stand apart from hardline principles. What happened was illegal."

1455 GMT: A Minor Strike? Press TV, while referring on today's stoppage by traders at the Tehran Bazaar, says that it was a "minor strike" by "several wholesale cloth traders". The website does note the jewellers' guild has announced it will join the strike on Wednesday (there were reports that some gold traders had closed their doors today).

In what appears to be an immediate reaction to the strike, Mehr News reports that Iran's Ministry of Commerce has reversed its decision to raise business taxes by 70%.

1355 GMT: Defending Iran. An intriguing angle emerging from the Mousavi-Khatami meeting (see 1235 GMT)....

The two men denounced the UN sanctions against Iran, questioning why no similar action had ever been taken against Israel and declaring that the Iranian people will not let any power interfere with their internal affairs". Mousavi and Khatami also criticised "the West" for its support of "terrorist groups".

1235 GMT: Meetings. Former President Mohammad Khatami's website has published a summary of his meeting on Monday with Mir Hossein Mousavi (see 1125 GMT).

1230 GMT: Parliament v. President. Another challenge from key member of Parliament Ahmad Tavakoli, who has said in a speech --- my paraphrase --- "How dare the President say that the law does not apply to him."

1220 GMT: The Bazaar Strike. Peyke Iran claims that this morning's strike in the Tehran Bazaar (see 1120 GMT) over Government taxes was in the gold and textile markets.

1215 GMT: Airlines, Sanctions, and Safety. A new twist in the tale of Iran's possibly-grounded flights: the European Union has banned most of Iran Air's jets from flying to Europe. EU officials denied that the measure was connected to international and US sanctions, with a spokesperson insisting, "We deal purely with safety requirements. Our controls focus entirely on safety, nothing else."

1130 GMT: Press Un-Freedom. One weekly publication in Tehran Province, Madineye Goftogu, has been banned for "slander of officials" and three others have received warnings.

1125 GMT: Discussions. Aftab News reports that Mir Hossein Mousavi and former President Mohammad Khatami have met to discuss the domestic situation and international sanctions.

1120 GMT: Economy Watch. Kalemeh claims, from eyewitnesses, that there was "unrest and strikes" amongst merchants, protesting over Government tax policy, in the Tehran Bazaar this morning.

1115 GMT: The International Front. The Chinese Foreign Ministry has criticised unilateral US sanctions in a news briefing: "China has already noted that the United States and other parties have unilaterally put in place further sanctions against Iran. Not long ago, the U.N. Security Council approved resolution 1929. China believes that the Security Council resolution should fully, seriously and correctly be enforced and cannot be wilfully elaborated on to expand Security Council sanctions measures."

Meanwhile, the head of the Iran-United Arab Emirates Chamber of Commerce says the managers of two companies linked to Iran’s Islamic Revolution Guard Corps have had their bank accounts frozen in response to the latest UN sanctions: “Khatam al-Anbiya and their subsidiaries, and companies that they thought were involved in Iran’s atomic work, are on the list.”

0830 GMT: Political Prisoner Watch. Parvin Jamalzadeh, detained on Ashura (27 December) has been sentenced to 8 1/2 years in prison for acting against national security by participating in illegal gatherings, disturbing public order, committing blasphemy, and insulting the Supreme Leader.

Journalist Emaduddin Baghi's court appearance has been postponed to mid-August.

Rooz Online publishes an interview with the daughter of Mohammad Seddigh Kaboudvand, the founder and president of the Kurdistan Human Rights Defense Organization, who is entering the fourth year of a 10-year prison sentence.

Tonia Kaboudvand speaks of worries over her father's health and says, “Human rights activists and defenders have been silent about my father’s situation and have over time forgotten about it.”

0810 GMT: Investment v. Sanctions. Rooz Online summarises this interesting development: Iran is removing barriers to foreign banks operating in the country.

Deutsche Welle, however, notes that sanctions are causing increasing difficulties for European companies such as EON and RWE to invest in Iran's energy sector.

0755 GMT: Attack on the Clerics. Ahmad Montazeri, the son of the late Grand Ayatollah Montazeri, has reiterated that the attack on his family's house last month was carried out in the presence of some government officials.

0745 GMT: The Labour Front. Iranian Labor News Agency reports that 500 workers at the Abadan oil refinery have protested and gone on strike over unpaid wages.

0715 GMT: Halting Democracy? Green Voice of Freedom claims that the recent Parliamentary decision to postponing municipal elections is the first step in a plan, backed by the Supreme Leader, to eliminate all elections.

0705 GMT: Rafsanjani Watch. And, amidst the talk of a Khamenei-Rafsanjani deal to avert immediate political crisis, two stories in Rah-e-Sabz that indicate others in the Government are still trying to cut down the former President.

The website claims that Rafsanjani was banned from ceremonies last week marking the "7 Tir" bombing of 1981. And it reports that the head of the office of Yasser Hashemi, Rafsanjani's youngest son, was arrested yesterday.

0700 GMT: Then Again.... Back to our opening story on the supposed resolution of the Islamic Azad University crisis through the Supreme Leader's intervention. A member of the Supreme Council for Cultural Revolution has said that the suspension of the SCCR's decision --- which effectively overrules Parliament and backs President Ahmadinejad --- is only temporary.

Press TV is now reporting on Khamenei's letter to Ahmadinejad and Rafsanjani "suspending" any decision on the university.

0650 GMT: Parliament v. Government. The Majlis is insisting that it should have the authority, as prescribed by the Constitution, to review treaties with foreign countries or companies.

The declaration should be seen in the specific context of the intervention by Speaker of Parliament Ali Larijani and other legislators in the international manoeuvres over Iran's uranium enrichment.

0640 GMT: Flashback of Resistance. Green Voice of Freedom recalls Mir Hossein's final appearance on Islamic Republic of Iran Broadcasting: "Death, yes. Retreat, never."

0630 GMT: Sanctions and Iran's Airlines. More follow-up from our story yesterday that US-led sanctions on fuel for Iranian aircraft may be grounding flights....

The Iranian Foreign Ministry has denied this morning that any flights are being affected and insists that supplies are uninterrupted.

The German Government has again said that fuel has been refused. That, however, does not cover the possibility that private companies --- like BP, who said yesterday that it had suspended deliveries --- have cut off supplies.

0530 GMT: We begin this morning with another check on the state of the universities crisis between President, Parliament, and Hashemi Rafsanjani.

Iranian media are taking the line that the Supreme Leader has ordered a suspension of both the Parliament's bill and the intervention of the Supreme Council of the Cultural Revolution, which in effect backed President Ahmadinejad's control of the university. It is unclear what Khamenei's decision means for the future of the institution; the university's new President was supposed to be appointed yesterday.

It is notable, however, that the suspension effectively recognised the current arrangements: 1) the Supreme Leader's order was announced by the university’s board of trustees; 2) Khamenei's directive went not only to Ahmadinejad and the SCCR but also Rafsanjani as "Board of Trustees Director".

The Latest from Iran (5 July): Talks and Conflicts

1800 GMT: Political Prisoner Watch. An EA correspondent brings the news that Amir Aboutalebi, an advisor to Mir Hossein Mousavi, was released today. Aboutalebi was detained on 28 December in the post-Ashura wave of arrests.

1400 GMT: And now the approved set of male haircuts, courtesy of the Ministry of Islamic Guidance and Culture:

NEW Iran & Sanctions: Could Tehran’s Flights Be Grounded?
NEW Iran Analyses: A Rafsanjani-Khamenei Deal on Universities Crisis? (Siavashi and Verde)
Iran Special: The Green Movement, the Regime, and “the West” (Nabavi)
Iran Thought: Maybe The Robot Can Be President
The Latest from Iran (4 July): Who’s in Charge?

1350 GMT: Rafsanjani "I Heart Khamenei". Rumour: Supreme Leader and former President Hashemi Rafsanjani meet, strike deal for Ayatollah Khamenei to limit the universities crisis with Rafsanjani praising the Supreme Leader.

Fact: Rafsanjani in Khabar Online --- "Not a day goes by where my regard for Ayatollah Khamenei is less than the previous day".

1345 GMT: Make the Connection. Less than 48 hours after we noted that the brothers Arash and Kamiar Alaei, two doctors prominent in the treatment of HIV/AIDS in Iran, have entered their third year of detention, we find this: "Increase of Sexual Transmission of AIDS in the Country".

1340 GMT: Grounding Iran? We have posted a separate feature with developing news that sanctions may be grounding Iran Air flights.

0935 GMT: Warnings. Peyke Iran claims that 10 daily newspapers have been warned because they published member of Parliament Ali Motahari's critique of the Government's subsidy reduction plans.

And in the academic world, Minister of Science and Higher Education Kamran Daneshjoo has allegedly said that students "opposed to the system" do not have a right to work".

0930 GMT: Revolutionary Guard Takes Power? Rah-e-Sabz has a lengthy article claiming that the Islamic Revolution Guards Corps is taking over Iran's energy sector.

0925 GMT: Parliament v. President. The Majlis Research Center has declared that 37% of the laws for Ahmadinejad's 5th Development Plan are "unclear".

0920 GMT: Where's Mahmoud? Remember, President Ahmadinejad is opening the new steel project in northwestern Iran (see 0745 GMT). Here's his dramatic annoucement:

"Sanctions won't hurt Iran."
0910 GMT: Press Un-Freedom. The Guardian of London features an interview with photojournalist Javad Moghimi, who took one of the iconic photographs of the 2009 protest, about the plight of journalists in Iran:

Since the June elections and following the demonstrations in December after the holiday of Ashura, two of his colleagues have been arrested, Moghimi says. His immediate boss, Majid Saidi, is on bail awaiting trial, charged with activities against national security and taking photographs of protesters. He says his close friend Masoud Lavasani, a political correspondent for Fars News, is in prison on hunger strike.

"He is going through hell," says Moghimi. "When I hear his news I get very upset and I get a lump in my throat, because ... I don't know what the future holds for news reporters and my friends in Iran.

"Their crime was to take photographs of the protesters and the demonstrations. If the Islamic Republic of Iran is able to arrest a photojournalist charged with activities against national security or taking photographs of the protesters, it is a joke to say we have freedom of speech, because there is no freedom as long as they arrest people for the crime of taking photos of demonstrations."

0900 GMT: Sanctions Front. Kazem Jalali,  spokesperson for Parliament's National Security and Foreign Policy Committee, has warned, "Although international circles are not impartial in dealing with lawsuits filed by nations, Iran reserves the right to lodge a complaint against the US for imposing unilateral sanctions.

Jalali and other Iranian officials are specifically mentioning Washington's ban on sales of aircraft fuel to Iran.

0800 GMT: The Battle Within. A series of reports on the conflict within the establishment....

Hojatoleslam Banaei claims that the distributors of flyers against Ali Larijani after Friday Prayers in Qom have been identified: "there is a current in the country, which doesn't want calmness to be established in society".

Ali Asgari, the Parliamentary liaison of the Expediency Council, has belittled the challenge: "The radical current is a handful [of people], you can transport them with a minibus."

And the universities crisis rolls along: key member of Parliament Ali Motahari has warned the Supreme Council for Cultural Revolution against intervention, as its main duty is "policy-making, not legislation". Kazem Delkhosh has asserted that the gathering of Basiji in front of the Majlis to demonstrate against the Parliament's bill on Islamic Azad University, was "organised".

In contrast, Jomhouri Eslami notes the reports of a Khamenei intervention, via a meeting with Hashemi Rafsanjani (see our separate analyses), and says the quarrel has been settled and all is business as usual.

Rah-e-Sabz takes a look over the political terrain and declares that "rifts in the hardliner camp are no longer hidden".
0755 GMT: Political Prisoner Watch. Advar News reports that journalist Masoud Lavasani, detained for more than nine months, has been granted a temporary release.

0745 GMT: Economy Watch. Press TV headlines the opening of a "key steel project" in Bonab in northwestern Iran, presided over by President Ahmadinejad. The website claims more than $170 million of finance with "800 job opportunities".

The ceremony comes a week after the opening of another steel complex in Natanz.

0715 GMT: We begin this morning with two contrasting analyses of yesterday's story of a meeting between the Supreme Leader and former President Hashemi Rafsanjani to resolve the dispute between Parliament and President over control of Islamic Azad University.

Meanwhile....

Iran and Sanctions

Looks like a disruption in the normal Ahmadinejed Government line that sanctions will have no effect on Iran's economy: Heshmatollah Falahatpisheh, the new speaker of the National Security Council, has said that if sanctions are implemented, the country will enter a period of severe difficulties.

Parliament to Dismiss Minister?

Member of Parliament Mehrdad Lahouti says that the Majlis is preparing steps for the dismissal of Sadegh Khalilian, the Minister of Agriculture

Political Prisoner Watch

Aftab News reports that Tehran Prosecutor General Abbas Jafari Doulatabadi has met for "several hours" with high-profile detainees, includig Isa Saharkhiz, Ahmad Zeidabadi, Mansour Osanloo, Masoud Moradi, Mehdi Mahmoudian, and Davoud Soleimani.

UPDATED Iran & Sanctions: Could Tehran's Flights Be Grounded?

UPDATE 1740 GMT: Britain's largest oil company BP has instructed its European operations not to refuel Iranian airlines "due to a decision from the U.S. Congress".

UPDATE 1530 GMT: Press TV has now posted a story which repeats the claim that Britain, Germany, the UAE, and Kuwait have suspended supplies of fuel.

Press TV adds denials from German'sTransport Ministry and Abu Dhabi airports that there was any ban; however, as EA readers have noted, this does not preclude a cutoff by private suppliers.

---

The German Bureau first alerted us to this potentially significant story this morning. A key pro-Government member of Parliament, Kazem Jalali, had spoken of court action against the US for its unilateral sanctions against Iran. Jalali specifically noted the American threat to suspend sales of aircraft fuel (see our morning updates).

Deep in the story was the note that the United Arab Emirates, Kuwait, and Germany had followed the American lead and halted fuel supplies.

Hours later came the confirmation, via Iranian Students News Agency and then relayed outside Iran, from the secretary of Iranian Airlines Union: "Since last week, after the passing of the unilateral law by America and the sanctions against Iran, airports in England, Germany, the UAE have refused to give fuel to Iranian planes."

Peyke Iran followed by reporting that an Iran Air flight from Frankfurt, Germany had been postponed and might be cancelled due to the fuel shortage.

And now our German Bureau adds this bit of information: on Sunday Iran Air cancelled a flight to Hamburg, Germany.

Watch this (air)space for developments....

The Latest from Iran (2 July): Ahmadinejad v. Larijani?

1930 GMT: The Battle Within. Back from a break to find what may or may not be a significant incident in the internal tension between the President and Speaker of Parliament Ali Larijani.

Iranian Labor News Agency reports that, after Qom Friday Prayers, a number of supporters of the Ahmadinejad Government issued a statement --- signed "People of Hezbollah" --- saying that they no longer regard Larijani as their representative in the Parliament and "want their votes back".

The statement claimed, "“It is said that you voted for Mr. Ahmadinejad’s opponent.”

NEW Iran: Establishing the First “Anti-Censorship Shelter”
NEW Iran Analysis: Assessing Europe’s Sanctions & Tehran’s Oil (Noel)
Iran Interview: Ahmad Batebi “The Green Movement Goes Underground”
The Latest from Iran (1 July): Establishing the Pattern

1755 GMT: Political Prisoner Watch. HRANA reports that Hamed Rouhinejad is in critical condition in Evin Prison due to complications related to multiple sclerosis and a lack of proper medical care.

Rouhinejad, a philosophy student, has been in detention since April 2009 on charges of membership in an anti-government organization and has been refused medical leave. He was sentenced to death in a trial last autumn but this was later commuted to 10 years in prison.

The website also writes that authorities in Karaj’s Rajae Shahr Prison have extended Behrouz Javid Tehrani’s time in solitary confinement, which has now lasted more than a month, at the request of the Ministry of Intelligence.

Javid Tehrani is the last remaining political prisoner from the 1999 student protests, the anniversary of which takes place next week.

1420 GMT: Friday Prayers Goes to Penalties Update. Looks like Ayatollah Emami Kashani may have made it through to the next round with a couple of late, hard challenges in his Tehran Friday Prayers sermons (see 1320 GMT).

Having played a conventional, unexciting game, Kashani suddenly got aggressive and put his boot into lawyers: "Defending the false is religiously prohibited and court attorneys should only defend the rightful. When they read a file and realize that the client is not in the right, they should not defend them.”

1415 GMT: Assessing the Situation. The full interview with Professor Ardeshir Amir-Arjomand, an advisor to Mir Hossein Mousavi, which we noted noted this morning (0725 GMT), is now in English.

1320 GMT: Your Friday Prayer Summary. Ayatollah Emami Kashani giving it his best today on the Tehran podium but I'm not sure he is going to eclipse World Cup fever.

Emami Kashani played it safe by going with a bash-the-West approach, "They accuse Iran of [efforts aimed at] producing nuclear weapons while Iran's [nuclear] program is scientific and industrial. Producing nuclear weapons has no place in Iran's nuclear pursuit."

There was the "they're keeping us down line" --- "They are well aware of this but they do not see Muslim states prosper. They do not want Islamic glory and awakening" --- which moved into the rallying call, "[Let's] join hands and through cooperation manage the country's affairs in the best possible way, particularly at present when the enemies are attacking the Islamic Republic with false accusations."

And Kashani went to the tried-and-true of Palestine, notably Gaza: "If Muslim states awaken and fulfill their duties, this land (Palestine) will not be swallowed up by the enemy."

So a competent performance but nothing too creative: I'm not sure if that would get Kashani past the quarter-finals of a major competition.

Then again, when are we likely to see the champions of recent years. e.g., H. Rafsanjani, vie for the Friday Prayers Cup?

1015 GMT: Political Prisoner Watch. Peyke Iran claims that Ghaemshahr Prison with a capacity of 250 prisoners, now has 763 detainees.

The website also has published this list of detainees in Rejai Shahr Prison:

Behrouz Javid Tehrani, 9 years imprisonment
Kobra Banazadeh, 5 years
Zahra Joushan, 1 year
Mansour Radpour, 8 years
Mansoor Osanloo, 5 years
Alireza Karami-Kheyrabadi, sentenced to death
Heshmatollah Tabarzadi, unclear status
Mostafa Eskandari, unclear status
Masoud Bastani, unclear status
Ahmad Zeyabadi, unclear status
Mehdi Mahmoudian, unclear status
Reza Rafiee, unclear status
Behnam Foyuji, unclear status
Rassoul Bodaghi, unclear status
Isa Saharkhiz, unclear status
Davoud Soleymani, unclear status
Ali Saremi, sentenced to death
Mohammad Ali Mansouri, 17 years of prison
Saeed Massouri, lifetime sentence
Houd Yazorlou, 3 years
Meyslogh Yazdannejad, 13 years
Ali Moubedi, 3 years
Afshin Baymani, lifetime sentence
Seyed Mehdi Fetrat, 3 years
Karim Marouf-Aziz, lifetime sentence
Hossein Tofah, 15 years
Shir-Mohammad Rezaie, 4 years
Farhang Pour-Mansouri, lifetime sentence
Reza Joushan, 1 year
Shahram Pour-Mansouri, lifetime sentence
Nasseh Yousefi, 5 years
Esmail Ordouie, 15 years

1010 GMT: More on the Drug Issue (see 0915 GMT). Abbas Deylamizadeh, the head of an Iranian welfare organisation, claims 300,000 poor drug users are in danger of becoming street addicts.

1005 GMT: The Battle Within. Hojatoleslam Mohammad Ashrafi Esfahani has warned that "radicals", with their unwillingness to discussion, have divided the "hard-line" camp in Iran, splitting it into two groups.

0959 GMT: The Budget Battle. The Parliament has passed President Ahmadinejad's 5th Plan on Monday with the cancellation of three articles. One of the cancelled provisions would have given the President millions in spending for "cultural purposes". Ahmadinejad's representatives reportedly were offended and left the session.

0955 GMT: The Oil Squeeze. Rah-e-Sabz reports that the Kuwaiti Independent Oil Group has joined the international suspension of gasoline sales to Iran.

0945 GMT: Labour Front. Peyke Iran claims that dismissed workers in Sanandaj in Kurdistan have gathered in front of the work ministry and that workers of Tabriz Tile Company have not been paid for four months.

0940 GMT: Political Prisoner Watch. RAHANA reports that detained student Zia Nabavi is in serious condition after hysteria and convulsions in Evin Prison.

0915 GMT: "Psyche Spinners" in Tehran. Writing for The Huffington Post, Setareh Sabety takes a look at disillusionment and drug use in Iran's capital.

0910 GMT: The Labour Front. Iran Labor Report claims that many Tehran Bus Company employees with more than 20 years of service have been offered a "buyout" of $15,000. The website adds that, to put pressure on  the workers, the company has moved depots farther from the city and even to other cities such as Karaj while reducing employee bus shuttles.

Human Rights and Democracy Activists in Iran asserts the Islamic Revolution Guards Corps is starting a takeover of the company with purchase of buses and new bus lines. The chief executive of the company is alleged to be Revolutionary Guards commander Ardeshir Moghimpour, using the pseudonym Hossein Bijani.

There is still no news from detained bus union members Saeed Torabian and Reza Shahabi.

0905 GMT: We have posted a separate feature on the establishment of the world's first "anti-censorship shelter".

0735 GMT: The Oil Front. Amidst our discussion today of Iran's energy sector, a point to note about its internal production: Deutsche Welle claims that a fire at the Naft Shahr wells is still burning 40 days after it started.

And, with thanks to EA readers, another item about foreign investment: "South Korea's GS Engineering & Construction ( said on Thursday that it has called off a 1.42 trillion won ($1.2 billion) gas project in Iran following sanctions on the Middle East nation."

0730 GMT: The Battle Within. The Motalefeh party, fighting back against pressure from Ahmadinejad supporters, has asserted its "good" credentials, declaring that the hope for leaders of "fitna" (sedition") to return to the Revolution has faded.

0725 GMT: Challenging the Radicals. Mohammad Salamati, secretary-general of the reformist Mojahedin of Islamic Revolution, says that radicals have "no real understanding of leading a country". Professor Ardeshir Amir-Arjomand claims "hardliners" are implementing a new constitution and declares that an independent media is needed.

Those criticisms do not appear to have had any effect, however, on Gholam-Hossein Elham, a member of the Guardian Council. He says those who want to change the religious regime into a secular state, on the basis of the Constitution and "wrong" reformist currents, are a symbol of division.

0715 GMT: Nuclear Front. Russian Foreign Ministry Spokesman Andrei Nesterenko has announced that the P5+1 group (US, UK, Russia, France, Germany, China) will meet today in Brussels.

0605 GMT: We start today with a look at Iran's economic position and sanctions. In a separate feature, Pierre Noël looks at Europe's sanctions and their effect on Iran's oil and gas sectors.

The Christian Science Monitor runs with the "Ahmadinejad bans Coca-Cola" story, which links up with Tehran's public spin of defiance: Press TV is headlining, "Iran Sanctions May Hit Japanese Firms".

More significantly, Press is featuring a sign of hope amidst the growing international pressure on Iran. Turkey's Energy and Natural Resources Minister Taner Yildiz said in an interview, "Turkey will continue to cooperate with Iran because the sanctions did not include any specific restriction on energy deals....Energy is not part of the UN sanctions."

Oh, I guess we should also mention that President Obama has signed the new US legislation passed by Congress earlier this week: "With these sanctions --- along with others --- we are striking at the heart of the Iranian government's ability to fund and develop its nuclear programmes."

Obama added:

To date, Iran has chosen the path of defiance. The door to diplomacy remains open. Iran can prove that its intentions are peaceful. It can meet its obligations under the [nuclear non-proliferation treaty) and achieve the security and prosperity worthy of a great nation.

Iran Analysis: Assessing Europe's Sanctions & Tehran's Oil (Noel)

Writing on Race for Iran, Pierre Noël offers an interesting analysis of European sanctions and Iran's oil and gas position, both regarding exports and imports. In the end, its significance is not as much economic --- Noël does not, for me, get to the heart of the tensions over whether Iran can satisfy its domestic demand, given the gap in imports and production left by the withdrawal of foreign companies, as well as cope with the restrictions on its exports --- as political: "Any issue that allows EU [European Union] member states to present a united front and make Europe exist on the world stage looks like a gift from heaven":

Iran is a country with very large reserves of natural gas, a lot of it relatively low-cost to produce.  With the right investment, Iran could become a gas exporter of global significance in about a decade.  Europe is one of the largest gas markets in the world.  Its combination of liberalized electricity markets and ambitious environmental policies has the effect of favoring gas as a fuel for power generation, at least in the mid-term.  Russia’s position in the European gas market raises concerns about market power and the politicization of gas supplies from Russia.  The EU supports new gas pipeline projects from Central Asia and the Middle East through Turkey to diversify Europe’s sources of natural gas; the availability of Iranian gas could be essential to the success of this diversification strategy.  Russia, on the other hand, should want to prevent or delay the emergence of Iran as a large gas exporter.

However, there are a number of uncertainties, which, taken together, raise serious questions about the practical validity of these interlinked propositions.  First, at the moment we do not know to what extent the latest EU sanctions will add to the difficulties already experienced by the Iranian oil and gas industry to source technology and finance.  These is a log of oil and gas activity going on in Iran, but large-scale gas export projects combining complex financing and cutting-edge engineering are not part of this activity.  This is certainly the case for LNG [liquified natural gas] projects, an area where the relevant technology is still largely controlled by Western companies; it is unclear to what extent big pipeline export projects could be carried on.

Second—and more fundamentally—it is far from certain that becoming a large gas exporter is a strategic priority for Iran, or even a clearly defined objective.  Iran’s potential to become a large gas exporter has been recognized for decades, but that potential has never materialized.  Iran imports roughly 5 billion cubic meters of gas per year (bcm/y) from Turkmenistan and exports roughly the same amount to Turkey.  The Islamic Republic’s small export contract with Turkey is notoriously unstable and has led to numerous rows over price and delivery.  European majors such as Total and Shell have had a terrible experience negotiating with Iran over LNG projects (and, during the 1990s, over oil projects as well).  When the European companies pulled back from new projects in Iran three years ago, ostensibly because of sanctions, the companies were not in a position to make final investment decisions on these projects for commercial reasons.

Becoming a large gas exporter would require a strategic decision by Iran, based on a wide political consensus—such as the one underpinning the Iranian nuclear program—to open the sector for real to foreign investors.  There is deep opposition to such a move in the Iranian political culture and the culture of its oil and gas bureaucracy, rooted in the memories of the U.S.-sponsored coup of 1953 following the nationalization of British oil concessions by the nationalist Mossadegh government.  If becoming a large gas exporter was a strategic objective for Iran, then the Iranian government would appear hopelessly incompetent at pursuing it.  Bu tgeology is not destiny; Iran may not want to be the next Qatar.

Furthermore, Iran is itself a large and fast-growing gas market, now 30% larger than the largest European markets, the UK and Germany.  Iran needs to continue developing some of its reserves simply to supply its domestic market; that is what Iran’s gas-related exploration and production activity has been about for some time and—I would suggest—that is what Iran’s gas-related exploration and production activity will continue to be mainly about.  The existing sanctions have been effective at killing proposed LNG export projects—but these projects might not have gone ahead anyway, in the absence of sanctions, for commercial reasons.  There is no indication that the sanctions have had any impact on the growth of gas production in Iran.  I do not know to what extent the Iranian industry’s exploration and production effort relies on European technology and services that would be made unavailable by new EU sanctions, and would not be replaceable by technology and services from Asian or South American companies.

This does not mean that Iran has no strategic energy policy.  In the context of the standoff with the “international community” over its nuclear program, Iran is obviously trying to use the attractiveness of its energy resources and geographical position to its political benefit.  The growing interest of Chinese oil and gas companies in Iran has been widely documented—but it has not led to any new gas export project.  Turkey’s ambition to increase its access to Turkmen gas via Iran has already been discussed on www.TheRaceForIran.com (see here andhere).  Given how strategic Turkmen gas (and the trans-Caspian pipeline) is to Europe’s Nabucco concept, Iran has an option to provide Turkey with both access to gas and leverage on Europe.  The Iran-Pakistan pipeline project, for which the Pakistani government has just reaffirmed its support, is another example where Iran uses its energy assets strategically to raise the cost of the U.S.-EU Iran policy.

The final point is about Europe’s plans for a large pipeline across Turkey that would bring gas from Central Asia and the Middle East to the EU, especially south-east and central Europe....

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