Iranian Gas for Ukraine?

Bottom Line: Iran has plenty of gas and is now looking to Ukraine (via Iraq and Moldova) for a new market.

Analysis: Iranian officials have been very vocal lately about the fact that they are courting desperate Ukraine as a market for their gas. Both Ukraine and Moldova are in the Russian gas stranglehold, and Iranian gas would alleviate this. "Both Ukraine and Moldova need natural gas, and Iran has huge gas reserves and is ready to consider future supplies of fuel to the two countries," Iranian ambassador to Ukraine Qasemi Aliabadi has told media. This is part of Iran’s desire to expand its natural gas transit routes. But more significantly, there is a new oil minister in Tehran and he’s moving fast on all fronts. Bijan Namdar-Zanganeh is the new minister in newly elected Iranian President Hassan Rohani’s government. His mission is to revive oil production, and aside from expanding new transit routes, he’s also looking at a price war to win back old customers.

Recommendations: Sanctions aside, the other roadblocks are already being overcome. In the case of Moldova, which Iran is eyeing as a market for its gas transported via its pipeline in Iraq and through Iraqi companies, the main problem is that Moldova doesn’t have a liquefied natural gas (LNG) storage infrastructure. As such, LNG that makes it way to Moldova will have to then be pushed on to other markets. This is where Ukraine comes into the picture. Ukraine has the infrastructure and could receive the gas from Moldova and store it in its southern LNG terminal. This will be an interesting showdown between Russia and Iran, the world’s two largest gas producers.