Iran is between Europe and Asia’s oil and gas market
Geographically, Iran is between the European and Asian gas markets. Iran could be a potential supplier to China through Pakistan and India (INDY). Europe and Asia both consume significant portions of the world’s natural gas production. Asia has the largest number of emerging economies. Its demand could grow in the future.
The supplies from Iran will strengthen the gas market in Europe. China and India account for more than 30% of the world’s population. This could be a huge market for Iran. Also, India (INDY) has a significant amount of crude oil imports. It’s met by Iranian exports. Currently, China’s market is led by Russian (RSX) companies like Gazprom (OGZPY). Gazprom, Lukoil (LUKOY), and Tatneft (OAOFY) represent the large-cap Russian ADRs (American depositary receipts) in the oil and gas sector. However, China also produces a significant amount of its consumption.
Iran might be eyeing the crude oil market in China. In 2014, Asia-Pacific consumed 678.7 billion cubic meters of gas. It produced 531.2 billion cubic meters of gas.
The above diagram explains how Iran can emerge as a potential supplier to Europe and Asia.
The Persian pipeline could end Europe’s dependence on Russian gas supplies. The pipeline will run from Iran to Turkey. Then, it will run from the southern European countries to Germany and France. The pipeline to Pakistan is under production. Experts think that New Delhi is also preparing for possible trade benefits with Iran after the banned is lifted. The future of the TAPI (Turkmenistan, Afghanistan, Pakistan, and India) pipeline is also in question. Experts think that cheaper Iranian gas will flood the market.