Will Iran and Turkmenistan agree on gas?

Baku, Azerbaijan, Jan. 24

By Viktoriya Zhavoronkova- Trend:

Turkmenistan, while declaring its neutral political positions, continues to create strong economic relations with neighbouring states and Iran is not an exclusion. Ashgabat is Tehran's best partner in the Central Asian region, they have large number of joint projects, but still have issues to be solved.

Turkemenistan's President Gurbanguly Berdimuhamedov has invited Iran's new President Hassan Rouhani to visit Turkmenistan. The date of the visit is still unknown, but it is obvious that the sides have much to discuss. One of the major issues for two president's meeting will definitely be gas supplies. This country is the only gas supplier to Iran, besides the SWAP agreement with Azerbaijan.

Turkmenistan, which has the world's fourth biggest deposits of gas, according to BP statistcs, exports this fuel to Iran, but during a number of past years this index decreases.

In 2011 Turkmenistan exported above 10 bcm of gas to Iran, in 2012 this figure felt to 4.5 bcm and finally in the first half of 2013 Iran received only 1.2 bcm of gas from Turkmenistan.

This is a quite negative tendency for Iran. The economy in the country is rather developed, many enterprises, functioning there, are using gas as a fuel. The country faces gas deficit in winter. While it produces about 450 million cubic meters of gas per day, the country's consumption is currently about 483 million cubic meters per day, and according to several sources, it even can reach out 700 million cubic meters per day during colder periods of this winter.

So, in order to keep its production of sustainable level and avoid economic problems, Tehran should resolve this issue as soon as possible.

Turkmenistan's supplies in this regard may seem the best way to resolve its gas problem, and what is the reason for these supplies' drop then? Iran has debt to Turkmenistan for gas, as it had problems with Western sanctions, imposed on this country. In 2012 this figure, according to Iranian Mehr agency, was about $1 bln.

Recently, the situation with Iran changed: the country took several steps forward the West in its nuclear program. As the result a part of sanctions imposed by the West on Iran were lifted. This factor may bring economic growth in the country, which already can be noticed: The International Monetary Fund's mission plans to visit Tehran later this week for its first regular assessment of Iran's economy in more than two years.

In case Iran's economy continues its growth, Tehran will be able to increase gas imports from Turkmenistan by five times. This will bring Turkmenistan annual income in an amount of $6-7 billion per year.

It is important to notice, that all infrastructure, needed to gas deals between the states exists.

All recent discussions, the meeting of bilateral intergovernmental commission of Turkmenistan and Iran, signed agreements in a number of areas including transport, electricity and others indicate high level of cooperation between the states. But one of the most important issues for both states, the issue of gas supplies, remains unresolved.

So, this upcoming meeting of the two presidents may bring reasonable profit to both sides.

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