Iran, Turkmenistan gas dispute going on

IRNA – The dispute between Iran and Turkmenistan over a natural gas deal has reached its peak after the Central Asian country cut its gas flow to Iran in winter 2017.

The negotiations did not lead anywhere, the dispute lasts and the case will most probably be refered to the International Court of Arbitration to as the last resort.

The dispute began in late 2016 that led to the cut-off of gas flow to Iran one year later. Turkmenistan had already threatened to cut off the gas many times so that it could push up the price of the gas exported to Iran. The northern parts of Iran that are far from the southern gas-rich areas were in need of Turkmenistan gas, especially in winter.

Hence, Iran tried to keep the gas flow through keeping the country satisfied. In the past few years, Iran completed the gas pipelines needed to take the gas to the cold northern parts and, in effect, got independent of the Turkmen gas.

During the winter 2008, with the abnormal temperature fall, Turkmenistan increased the gas price eight-fold, yanking it up to $360 from $40 for every 1,000 cubic meters. Under the dire conditions, the Iranian government agreed with the price, but later, with the fall in world gas price, the price of the imported gas from Turkmenistan dropped as well.

Turkistan claims Iran owes it $1.5 to 1.8 billion from sales between 2007 and 2008 when glacial winters led to severe energy shortages across Iran, forcing it to raise gas imports from its northeastern neighbor. In late December 2017, Ashgabat took the issue to arbitration to claim the money; following the complaint Iran decided to file a complaint against Turkmenistan to claim a similar amount as compensation.

Iran’s complaint has three parts: Turkmenistan’s cutting off the gas without prior notice on January 2017, low quality of the gas, and the high price. Although Iran no longer needs to import gas from Turkmenistan, it tries to keep the import with the purpose of expanding the interactions with the neighbors and presence in the regional energy market.

Iran’s Deputy Minister of Petroleum Hamid-Reza Araqi had told IRNA that Tehran was still interested in purchasing natural gas from Ashgabat, ‘Nonetheless, if they do not accept to lower their prices in the future, we will take the issue to the International Court of Arbitration.”

By and large, Turkmenistan will be the loser of the dispute. First, it lost its biggest buyer — Iran. Second, gas export from the country is very costly because it needs long expensive pipelines to send its gas to its new customers, namely China, Europe and Pakistan, while Turkmenistan gas is exported to Iran with the lowest transfer cost: the two countries are neighbors. And third, Turkmenistan, as one of the biggest gas reserves in the world, needs Iran as its export gateway.