Iran to Propose Turkmenistan $30b Gas Barter Deal

Iran to Propose Turkmenistan $30b Gas Barter Deal Iran to Propose Turkmenistan $30b Gas Barter Deal

Iran has prepared a $30 billion draft economic proposal for Turkmenistan whereby the former will export goods and technical and engineering services in exchange for Turkmenistan's natural gas, a deputy oil minister said.

Iran has been purchasing natural gas from Turkmenistan in the past 20 years, the annual value of which stands at $2-3 billion, Mohammad Taqi Amanpour said, adding that Iran has mainly paid Turkmenistan in cash, Shana reported Sunday.

The proposal envisages export of engineering and technical services in lieu of the natural gas Iran imports annually from its northern neighbor.  In the past year, more than 70 competent companies were identified, which have submitted their proposals through a tender.

"The proposals were worthwhile insomuch as they prompted the government to suggest a 10-year barter deal with Turkmenistan, valued at $30 billion, to purchase Turkmen gas in exchange for Iranian goods and services," Amanpour added.

The first gas pipeline connecting the two countries -the 200-kilometer Korpedzhe-Kurdkui pipeline- was launched at the end of 1997. Iran funded the construction of the pipeline to import 8 billion cubic meters of gas a year, mainly to areas of northern Iran that were not well connected to the southern gas fields.

 In early 2010 a new, second pipeline bringing Turkmen gas to Iran was launched. At that time, leaders in the two countries spoke about gas imports to Iran reaching up to 20 bcm annually. A new gas-compressor station started operation in western Turkmenistan in December 2013, built specifically to export more gas to Iran.

Some reports, however, suggest that Iran, one of Turkmenistan's top three gas buyers after China and Russia, will soon stop importing Turkmen gas. Oil Minister Bijan Namdar Zanganeh said last August that Iran no longer needed gas from Turkmenistan: "Iran is importing Turkmen gas just because it is important to promote political and economic relations with Turkmenistan," Zanganeh said.

One of the reasons behind the barter proposal or a possible halt in gas imports from Turkmenistan might be attributable to the fact that Iran has faced problems regarding balance of payments and is struggling to make hard currency payments for the gas due to the international sanctions designed to curb its nuclear program.