Iran Gas Dispute With Turkmenistan Unresolved

EghtesadOnline: The National Iranian Gas Company filed a lawsuit against Turkmengaz, the national gas company of Turkmenistan, last year in the International Court of Arbitration.

News ID: ۷۴۸۰۵۹

04 August 2019

Despite rumors in sections of the media on Tuesday, which reported that Iran has won the case, no court verdict has yet been issued, a NIGC spokesman said.

“The case is still under review and further investigations are going on. The court has not yet ruled in favor of any party,” ISNA quoted Mohammad Asgari as saying.

Rejecting reports from the rumor mills, he asserted that any new development will be reported by the NIGC, according to Financial Tribune.

According to a 1997 agreement between the two countries, Turkmenistan exported gas to Iran and jacked up prices almost every year.

Iran imported Turkmen gas to supply its northern regions, especially in winter. In 2006 Turkmenistan increased gas prices nine-fold to $360 per 1,000 cubic meters from $40.

Contract Violation

Despite having one of the largest gas reserves in the world, Iran had problems supplying gas to some regions at the time due to the lack of infrastructure. Therefore, Iran continued importing gas from its neighbor until December 2016 when Ashgabat stopped gas exports claiming Tehran had not paid a $1.5 billion bill.

Iranian officials disputed the claim, saying the amount was not correct and that the Central Asian state’s decision to unilaterally halt natural gas supplies was a violation of the mutual contract.

Regarding the contract the NIGC says Turkmengaz cannot unilaterally suspend gas deliveries even if Iran had unpaid dues.

Based on an NIGC statement, the debt dates back to the sanctions era when Iran was not able to do business with most countries due to banking restrictions. However, Iran cleared a big portion of its debt by providing Turkmengaz with goods and engineering services.

Tehran imported about 23 million cubic meters of gas per day from Turkmenistan before the dispute.

Although gas imports stopped in late 2016, Iran faced no problem supplying its northern areas from then on, as it had expanded its gas network, and several phases of gas fields in the Persian Gulf had come online, making Iran self-sufficient in gas.

Traditionally, Turkmenistan exported its natural gas to Russia until 2016, but the energy trade came to a halt following a dispute over gas prices between the two states.

Losing Iran and Russia left China as the only foreign buyer of Turkmen gas through a pipeline that supplies between 30-40 billion cubic meters annually.

Turkmenistan has reportedly turned to energy-hungry India as New Delhi plans to import natural gas from Central Asia in the future.