Issue 867, 4 December 2009

Gas on agenda for talks

Omani ministers have been talking up the relationship with Iran, whose importance was underlined by the visit to Tehran this summer of Sultan Qaboos Bin Said Al-Saeed (GSN 859/1). As well as acting as a mediator between the embattled Islamic Republic and its critics, notably the United States and United Kingdom, Oman has a number of national interests in developing ties with Iran, including in the energy sector.

In mid-November, information minister Hamad Bin Mohammed Al-Rashdi called for an expansion of bilateral ties, saying: “We want to bolster co-operation with Iran.” He added: “Iran enjoys a good position in the Middle East and it is necessary that the two countries’ relations be strengthened.” Two days later, foreign affairs minister Yousef Bin Alawi Bin Abdullah said no third party could influence Muscat’s policies on Tehran, describing the relationship as “strategic”. Omani foreign policy was built on co-operation, stability and regional security, he said. Alawi is due in Tehran again this month.

Sultan Qaboos’ visit to Iran in August was the first visit by a regional leader since the 12 June elections (GSN 859/16, 853/18). It was also the Sultan’s first visit since the fall of Shah Reza Pahlavi in 1979 and was seen as evidence of Oman’s pragmatic view that Iran in its current form is here to stay.

On Qaboos’ agenda was the potential purchase of Iranian gas. In late November, oil minister Mohammed Al-Ramahi met his Iranian counterpart, Masoud Mirkazemi. According to the official Islamic Republic News Agency, gas swaps, gas transit, Iranian gas export to Oman, the development of the Kish and Hengam gas fields and bilateral investments in the gas sector were discussed. National Iranian Gas Company managing director Seyed Reza Kasaeizadeh was quoted as saying that Oman needed to purchase 2bcf of gas, and that the Kish gas field and different phases of the South Pars gas field were being considered for gas exports to Oman.

Iran and Oman agreed in 2008 to jointly develop the Kish field at an estimated cost of $7bn-12bn, with Oman reportedly responsible for raising the capital in return for 60% of the gas from phase one and 40% from phase two. Under this agreement, the project’s first phase will transport gas to Oman at 1bcf/d, rising to 3bcf/d. Importing gas has long been on the agenda, with Oman more proactive than its Arab neighbours in forging economic partnerships with Iran (GSN 837/11, 817/12). An agreement on the joint development of the Hengam field, which adjoins Oman’s West Bukha field, was signed during President Mahmoud Ahmadinejad’s visit in 2007 (GSN 807/14, 639/15, 602/15, 505/14, 363/14, 327/6).