Despite the sectarian barbs traded between Saudi Arabia and Iran, Iran’s unique ability to meet the kingdom’s fast growing demand for electricity may help spur a reconciliation, according to the Atlantic Council‘s Jean-François Seznec.
In his report Crude Oil for Natural Gas: Prospects for Iran-Saudi Reconciliation, Seznec argues that the two dominant energy producers do not necessarily need to see their energy production as competition.
Saudi Arabia’s currently fuels its stunning 8 percent annual rise in demand for electricity with precious crude oil due to little low cost domestic natural dry gas reserves. Iran’s vast gas reserves could be used to meet the kingdom’s growing needs, but after decades of punishing sanctions its dilapidated gas fields need an estimated $250 billion in repairs.
If Saudi Arabia used its investment power or buying power to help revitalize Iran’s gas industry, it would both secure the energy it needs to meet its citizens’ demands and free up its crude oil for export.
While the sectarian rhetoric hurled back and forth may seem unstoppable and the timeline for reconciliation may be long, Seznec contends that both sides are rational at heart and highlights that that the benefit of economic cooperation on energy issues could open up better relations on a range of issues.