Transit of Energy Resources from Iran via Georgia to Western Markets Prospects, Risks, Challenges and Opportunities

Abstract

The paper attempts to analyse possibilities for energy transit from Iran to Georgia and further to the Western markets that have recently opened to energy supplies from Iran as international sanctions have been lifted. Iran, estimated to be the world's fourth-largest country by proven oil reserves1, and first or second by gas reserves2, is in the process of reclaiming its share of gas and oil exports to the world, and in particular to Europe. The issue under discussion goes beyond just the question of diversification of supply sources and energy security for Europe, or economic advantages for either Iran or Georgia. Re-opening of these promising opportunities for Iran will have strong repercussions for the overall geo-economic and geopolitical order at the regional scale and probably well beyond it. The dynamic of reviving energy cooperation involving Iran is also entangled with various political risks, in particular for neighbouring and transit countries such as Georgia. In the present paper we have identified key actors engaged in the process of European-Iranian energy cooperation involving Georgia - at national and regional levels; motivation and incentives of the potential stakeholders; and, possible scenarios coupled with the respective challenges and risks, with special focus on Georgia’s transit functionality and its energy market. The research framework includes the assessment of viable routes by applying analytical framework of SWOT, which stands for strengths, weaknesses, opportunities and threats. Political risk analysis is carried out by applying the political risk assessment method as adapted from International Country Risk Guide. Our conclusion is that such a project is hardly feasible in the short term, although conditionally realistic in longer time frame.