Iran, Turkey gas best post-revolution contract: expert

Business Materials 2 February 2016 18:48 (UTC +04:00)

Tehran, Iran, February 2

By Mehdi Sepahvand -- Trend:

The Iran-Turkey gas contract has been Iran's best and most profitable contract since the revolution, energy expert Mohammad Ali Sadeqi said.

A recently endorsed fine that Iran has to pay for violating the contract is nothing compared to the benefit the country has received so far, the expert told Trend February 2.

The head of National Iranian Gas Company (NIGC) announced Hamid Reza Araqi announced on Feb.2 that Iran was fined $1 billion in the International Court of Arbitration over gas raw with Turkey. A couple hours after his statement NIGC announced that the final verdict hasn't issued yet.

Aqari said Iran must offer 10-15 percent of discount on gas sold to Turkey.

Based on the ruling, Turkey had asked 35.5 percent of discount on Iranian gas, Director of the National Iranian Gas Compan, Hamid-Reza Araqi said.

"The International Court of Arbitration has ruled a 10-15 percent of discount for the gas supplied to Turkey during 2011-2015," he said.

Turkey, which buys around 10 billion cubic meters of gas from Iran, opened two separate cases against Iran in 2012. One of the files was over higher gas prices and another was over deficiencies in gas distribution. In the second case, the court sided with Iran.

Iran proposed to double exports of its natural gas for a discount last year, but Ankara rejected the offer.

In a separate court case against Iran in 2004, Turkey's gas grid won a 16.5 percent of discount.

According to Sadeqi, the proportion between Iran-Turkey benefits of the deal has so far been "something like 80 to 20" and if Iran pays the fine, it will not be important.

Sadeqi noted that what Iran does in practice is to buy gas from Turkmenistan and export it to Turkey with some added value.

Iran imports 7 bcm/y of Turkmen gas.

The construction of pipeline started in 1996 after signing a gas deal between Turkish and Iranian governments for transfer of 6 billion cubic meters of gas per year. The gas deal was signed on 30 August 1996. The pipeline was commissioned on 26 July 2001.

On 1 January 2008, Iran reduced gas supplies to Turkey, and on 7 January 2008 gas supplies were stopped because of cut-off gas supplies from Turkmenistan. The supplies were restored on 27 January 2008. The supply was cut off again in February 2008 because of bad weather conditions.