Tehran-Ashgabat Gas Row in ICA

EghtesadOnline: Iran has finally filed a lawsuit in the International Court of Arbitration against Turkmenistan for cutting off its natural gas supply in late 2016, after unsuccessful efforts to resolve the issue through negotiations.

News ID: ۷۸۳۵۹۲

07 August 2018

"Both sides have handed over documents and have selected their arbitrators … The case awaits the final decision of the court," Hamidreza Araqi, managing director of National Iranian Gas Company, was quoted as saying by ISNA on Sunday.

The official noted that ICA is focused on studying what the two sides claim and what they really owe or demand, according to Financial Tribune.

Araqi noted that "the claimants are obliged to comply with whatever the arbitrators determine".

Asked about the time it takes for a verdict, he said "such a case requires one to two years".

Ashgabat stopped gas exports to Iran in January 2017, saying it was owed $1.5-1.8 billion for gas it had delivered to Iran.

Iran, which disputes the claim, has imported Turkmen gas since 1997 to supply its northern region, especially in winter, even though it has large gas fields in the south.

According to Iran's Oil Minister Bijan Namdar Zanganeh, “they claim Iran owes them $1.5 billion over the gas exports but we believe that figure is not correct."

In November 2017, Araqi told ISNA he hoped outstanding differences could be papered over through dialogue.

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

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 ninefold to $360 per 1,000 cubic meters from $40.

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

According to Araqi, Turkmengaz has claimed that Iran owes roughly $2 billion in 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.