Turkish Delays in Fixing Damaged Gas Pipeline Unacceptable: NIGC

EghtesadOnline: The National Iranian Gas Company has officially notified Turkey's Botas, the gas importing company, about its lack of cooperation regarding resumption of natural gas import from Iran that was interrupted 60 days ago, the NIGC chief said.

News ID: ۷۵۰۱۲۹

31 May 2020

“Turkey’s inordinate delay and reluctance in repairing the ruptured gas pipeline (for import) is unacceptable legally and ethically. NIGC may take lawful action if necessary,” Hassan Montazer Torbati was quoted as saying by ILNA.

The flow of Iranian natural gas to Turkey was disrupted two months ago due to a pipeline explosion. It was the tenth such incident since 2001.

“As in the past they could have fixed the pipe in three days. However, Botas has done nothing since March 31 when the Kurdistan Workers' Party group or PKK sabotaged the pipeline.”

“Future contracts will be based on transparent pricing formulas so that in unusual cases (like the coronavirus pandemic), the two sides do not have to quarrel over prices,” he said without elaboration.

Blaming the fallout from Covid-19 for the lengthy delays in repair work is unwarranted, Torbati said, adding that energy service companies in the neighboring country have been operating normally since April.

Widespread Speculation

The procrastination has given rise to widespread speculations, one being that Ankara may not renew its contract to buy gas from Iran. The NIGC official said talks  to renew (or terminate) the last agreement would start in the near future.

It is likely that the Turkish government could replace Iran with other gas suppliers (from Russia or Azerbaijan) apparently because of lower prices.

Iran started selling gas to Turkey in 2001 and is the second largest gas supplier to the country after Russia. Annual export of the fuel is in the region of 10 billion cubic meters.

The two sides signed a contract in 1996 to export up to 10 billion cubic meters of gas a year to Turkey over 25 years. But in March 2012 Botas went to the International Court of Arbitration (ICA) saying that Tehran had overcharged. It won the case.

The price of Iranian gas between 2012-16 was not officially disclosed, but according to media reports, it was higher than prices offered by Russian and Azeri firms.

Turkey also filed a separate lawsuit accusing Iran of insufficient gas supplies, but lost that case.

Omid Shokri Kalehsar, an independent expert on energy security in Washington, believes that there is no guarantee that the agreement with the Turks (valid until 2026) will survive long into the future.

Turkey has started importing gas from Azerbaijan via the Trans-Anatolian Natural Gas Pipeline and is due to import Russian gas from the land-based TurkStream gas pipeline soon.

Regarding gas exports to Iraq, Torbati said it imports up to 28 mcm of Iranian gas a day for power generation.

He added that the Kurdistan Regional Government of Iraq has held several rounds of negotiations with the Turks to sell gas. The talks failed because KRG gas reserves are limited (5 trillion cubic meters compared to  Iran’s 34 tcm). Moreover, the region lacks infrastructure to supply gas to Turkey in big volumes.

Talks are underway with Oman for exporting gas to the Arab nation and as a first step a pipeline will be laid between Minab and Jask, in Hormozgan Province, which  will later be extended to the sultanate through a subsea pipeline.

Iran-Oman gas pipeline project is expected to connect Iranian gas infrastructure to Omani consumers and LNG plants for re-export.

According to projections, an estimated 28.3 million cubic meters of gas per day could be exported to the Arab neighbor in the Persian Gulf through a direct pipeline by diverging branches of Iran Gas Trunkline 7 (IGAT-7).