Despite substitute routes, it is likely that Turkey will renew its gas import contract with Iran as it is economically viable, a spokesman of the Iranian Oil, Gas and Petrochemical Products Exporters' Union said.
“In addition to extending infrastructure, gas export prices have been modified and Turkish officials have expressed satisfaction,” Hamid Hosseini was quoted as saying by ILNA.
As per a 25-year deal, the National Iranian Gas Company (NIGC) started selling gas to Turkey in 2001 and is the second largest gas supplier to the neighbor after Russia. The contract expires in 2025, and Ankara is in negotiations with exporters (including Iran) following the discovery of a gas field in the Black Sea.
Iran exports 10 billion cubic meters of gas per year to Turkey and infrastructure is in place to double the volume, he added.
"Iran is the world's third largest gas producer, producing 850 million cubic meters of gas a day but is struggling to increase its footprint in global markets because most of what is produces is consumed domestically."
The new US sanctions notwithstanding, Turkey is willing to continue imports simply because if it does not it will not be able to meet its winter energy demand, mainly in the southern regions, Hosseini noted.
NIGC and Botas, Turkey's state oil and gas company, were supposed to start talks on the terms of a new contract in 2020 but that was postponed due to Covid-19 pandemic.
NIGC uses IGAT-9 with a length of 1,900 km to transfer gas from Asalouyeh, Bushehr Province, to Bazargan district in the northwestern province of West Azarbaijan, which then extends into Turkish territory.
IGAT is a series of nine large diameter pipelines built to supply gas from refineries in the south (Khuzestan and Bushehr provinces).
“Importing gas from Azerbaijan via the Trans-Anatolian Natural Gas Pipeline has already started and Ankara buys Russian gas using the land-based TurkStream pipeline,” he said, adding that importing Iranian gas is still appealing to Turkey.
Not denying the fact that finding new sources of energy has always led to changes in energy geopolitics, Hosseini said Turkey’s discovery of 320 billion cubic meters of natural gas reserves in the Black Sea will not affect the terms of new contracts because the gas discovery is not a "game changer" for Turkey, in the sense that it will not fully cover its energy needs.
“It will be difficult for Turkey to explore gas from the new field and supply it to the domestic market in the short term. It needs billions of dollars in investment and the plan cannot become operational in less than 10 years.”
Energy Diplomacy
Despite good conditions to renew the gas contract with Ankara, energy security analysts namely Omid Shokri Kalehsar believe that energy diplomacy in Iran needs to be redefined.
“Cordial political relations with neighbors, reducing the bloated bureaucracy and putting in place a functioning regulatory body and a responsive legal framework can help Iran better introduce its strategic exports, like natural gas, in overseas markets.”
Moreover, the whopping domestic consumption should be curbed over time. Of the total 800 mcm of gas produced daily, close to 680 mcm is consumed locally and last winter it was 730 mcm per day.
The US is not happy with Turkey's energy imports from Iran and is seeking to increase its own share of the Turkish energy market and reduce the share of Russia and Iran by increasing LNG exports to Turkey.
In addition to Russia, Azerbaijan and Iran, the US and Qatar, along with Nigeria and Algeria, supply Turkey with liquefied natural gas (LNG).
