Iran Willing to Settle Turkmenistan Gas Row Out of Court

EghtesadOnline: Iran has weighed filing a suit against Turkmenistan for cutting off its natural gas supply at the end of last year, but Iran's state gas company prefers to discuss and settle the dispute outside of court.

News ID: ۷۸۰۳۲۳

06 November 2017

“Negotiations on the gas dispute are underway... We hope to end the dispute through dialogue,” Hamidreza Araqi, the managing director of National Iranian Gas Company, was quoted as saying by ISNA on Sunday.

“Iran still has time for taking legal action against Turkmenistan but any issue, in my opinion, can be settled in negotiations,” Araqi added.

The Central Asian state’s decision to unilaterally halt natural gas supplies to Iran in December 2016 is considered a violation of the terms of its contract with Iran. The country increased gas prices nine-fold to $360 per 1,000 cubic meters from $40, according to Financial Tribune.

Araqi recently said that Tehran was still interested in purchasing natural gas from Ashgabat, "Nonetheless, if they do not accept to lower their prices as per contractual terms, they will have to deal with the issue at the International Court of Arbitration.”

Pointing to the terms of the contract between the Turkmens, Araqi noted, Turkmengaz —the state gas company— cannot unilaterally cut off the gas supply even if Iran had unpaid dues.

According to the official, the company has alleged Iran should settle roughly $2 billion unpaid dues for gas deliveries.

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. Iran cleared a big portion of its unpaid debt by providing Turkmengaz with goods and engineering services.

Iran's gas production capacity has reached 885 million cubic meters per day. It exports the fossil fuel to three neighboring states, namely Turkey, Armenia and Azerbaijan via pipelines.

Ankara receives more than 90% of the gas exports under a long-term contract, and Yerevan and Baku receive around 6% and 3% under swap agreements.