Tehran, Ankara Agree to Increase Gas Exports at Modified Price

Tehran, Ankara Agree to Increase  Gas Exports at Modified Price Tehran, Ankara Agree to Increase  Gas Exports at Modified Price

Iran has reached a preliminary agreement with Turkey to increase gas exports at a modified price, Iran's ambassador in Ankara told reporters.

Iran, which is selling gas to Turkey from 2001, is the second largest gas supplier to the country after Russia, delivering 10 billion cubic meters of gas annually. The price of Iranian gas is not officially disclosed, but according to media reports, Iran sells 1000 cubic meters of gas to Turkey for $480, while Russia and Azerbaijan sell the same amount for $420 and $340 respectively.

"Iran and Turkey have reached agreement in principle to increase the amount of gas flow from Iran to Turkey and also to relatively modify the price at which gas is sold to the neighboring country,” Alireza Bigdeli was quoted by Tasnim News Agency as saying.

The agreement was signed following lengthy disputes over price. Iran said in April it will not reduce the price of gas it exports to Turkey unless a new contract is signed between the two neighbors whereby the Turks agree to increase the amount of gas they import from Iran. Ankara reportedly rejected Tehran’s proposal two months ago.

Turkey purchases 90-95 percent of Iran’s exported natural gas which is the most expensive gas the country buys, Turkish President Recep Tayyip Erdogan said during his visit to Tehran in April. "Should Iran lower the price, we will definitely increase the amount of gas we import from Iran," Erdogan told a press conference with his Iranian counterpart Hassan Rouhani.

Iran’s envoy did not reveal any figures for the higher exports, but according to Natural Gas Europe, for significant increase in gas export Iran must construct a 1850-km 9th cross-country pipeline (IGAT9), which would start from South Pars gas field, in the Persian Gulf, to Turkish borders. It will reportedly cost an estimated $6 billion.

Bigdeli said that a new final agreement should be signed to clarify the new terms and price reduction and should be passed as law by both countries' parliaments.

Turkey’s state-owned oil company Botas approached the International Court of Arbitration regarding the price and volume of Iranian gas in March 2012, claiming that Iran had reduced the volume of gas exports to Turkey by 25% without mutual consent. It also claimed that Iran was selling natural gas to Turkey at a higher price compared to other countries in the region. A final verdict has not been passed yet, the envoy was quoted as saying.