How is Iran’s role in the regional energy sector changing and how does this shape the country’s strategic place in the broader politics of the Middle East?

The Iranian draft budget for the 2013/2014 period assumed a 40% decline in oil revenues taking into account the economic consequences of international sanctions since 2012 that have targeted Iran’s oil and natural gas sector. Yet, Iran is making plans to boost its energy exports to circumvent Western sanctions and ease its losses. Sanctions were not an unexpected outcome of the previous negotiations on Iran’s nuclear program giving Iran – maybe not ample – but time to build non-Western and regional ties to increase its options. These include the strategic investment in electricity exports in neighboring countries as well as the construction of new grids to these areas, the expansion of natural gas exports and the change of crude oil imports. This paper seeks to argue that although the sanctions have reduced the immediate revenues of the government, particularly through decreased investments and relations to the West, new opportunities have been sought and groomed since 2009 to balance out these losses and diversify its energy export dependency.
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Read the full article: “Sanctions and Iranian Energy Exports. As Crude Oil Sales Decline New Opportunities Arise.” Lusíada. Política Internacional e Segurança, No. 9 (2013).

In October 2012 Iran signed an agreement to export electricity to both Pakistan and India. Although faced with harsh threats from the U.S., the Pakistani government has embraced this path and agreed to the construction of an Iranian-Pakistan pipeline.[i] This agreement is the newest in a line of existing electricity export agreements Iran already holds with Armenia, Turkey, Afghanistan, Iraq and Syria, while facing austere sanctions from the West. Iran has pursued the expansion of its electricity capacity in the past decade to meet growing domestic demand as well as opportunities to export regionally. Iran is building long-term relations that cannot be as easily sanctioned as crude oil or natural gas exports by investing significantly in transmission lines across borders. Already Iranian electricity exports have increased by more than 45% compared to the previous year. This strategy highlights Iran’s effort to manifest itself as a prominent regional player and increase its neighbors’ dependencies on its energy sector.
[i] Ahmad, Faiz. “Pakistan, Iran to start work on gas pipeline in Jan 2013,” NationalTurk Pakistan News. December 25, 2012.
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Read the full article: “Iran’s Flourishing Regional Influence: Electricity Exports as a Loophole to Sanctions,” Science & Diplomacy, Vol. 2, No. 3 (September 2013).

This post is by Shabnam Mirsaeedi-Gloßner, MPA class of 2008 and research fellow at the Berlin Center for Caspian Region Studies and PhD student in the Caspian Region Energy and Environment Studies Department at the Freie Universität Berlin.