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Iran to give 20% gas discount to Turkey border industries

Business Materials 3 March 2015 16:19 (UTC +04:00)

Baku, Azerbaijan, Mar. 3

By Khalid Kazimov - Trend:

Iranian Deputy Oil Minister Hamidreza Araqi has said that the ministry is going to provide Iran-Turkey border markets with a gas discount to promote production, Fars news agency reported March 3.

Araqi said that if production units launch in the areas mentioned, Iran would sell them gas with 20 percent discount and that exporting gas would be more reasonable than using it to produce export-bound electricity.

Iranian Oil Minister Bijan Namdar Zanganeh said Feb. 17 that the ministry had signed six contracts to provide the private sector with gas to be used in the production export-bound electricity.

The contracts follow Iran 's policies on resistance economy where provisions have been made for the Oil Ministry to diversify its forms of gas export.

Zanganeh pointed out that even if the price of gas is granted to be 13 cents (as proposed by the parliament Energy Commission), the price of gas given to domestic petrochemical facilities would still be 40 percent of that exported abroad, hence the gain in transforming gas into electricity and then exporting it.

"We believe that things find economic meaning if there's added value to them; that is, if we assign gas to electricity production and then export the electricity, it has to be more profitable than exporting gas. Exporting gas as it is, would be more reasonable than turning it into electricity and selling it cheaper," Araqi noted.

He said that the ministry has acquired permission to offer the discount only to industrial production units and not power plants.
The reference prices to calculate the discount are that for the gas exported to Turkey, he said.

Turkey imports about 20 percent of its oil and gas needs from Iran.

Ankara has repeatedly over the years requested a discount on the price of gas it imports from Tehran.

Araqi on June 14 dismissed the request as illogical, noting that Iran has proposed to raise the volume of gas exports to Turkey up to 5 billion cubic meters per year in exchange for giving a discount.

"But the Turkish side accepts neither the proposal to increase gas imports, nor the current price," he explained.

Iran is currently charging Turkey $490 for every 1,000 cubic meters of gas while Ankara says it has to pay only $335 and $425 to Azerbaijan and Russia, respectively, to import the same amount of gas.

Edited by CN

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