Turkey Revising Iran, Azeri Gas Contracts

Turkey Revising Iran, Azeri Gas Contracts

Turkey will abandon the “take or pay” principle in gas supplies from Azerbaijan and Iran, Turkish Minister of Energy and Natural Resources Taner Yildiz told local media.
Yildiz said that Turkey will abandon the “take or pay” principle in gas supplies from Iran and Azebaijan in late 2014, and 2015, respectively.
“Azerbaijan and Iran will have to ensure sufficient deliveries of gas to Turkey and if the deliveries are insufficient, then they will not be included into this mechanism,” Yildiz was quoted by Azernews as saying. He reminded that Turkey completely abandoned this principle in gas supplies from Russia in 2013.
 According to a ‘take-or-pay’ clause the buyer agrees to either receive and pay for a minimum quantity of a commodity as per the contract (the TOP Quantity) or pay the applicable contract price for such TOP Quantity if it is not taken during the applicable period.
“It is not reasonable to have to pay for the gas that is not received,” Yildiz said, adding: “These advance payments come out of the public purse. I believe this matter will be solved.”
Turkey buys Iranian gas at $490 per 1,000 cubic meters, while it pays $335 for 1,000 cubic meters of Azerbaijani gas that is supplied via the South Caucasus Pipeline (Baku-Tbilisi-Erzurum pipeline), according to Azernews. The country pays $425 for 1,000 cubic meters of Russian gas.
A contract for the supply of Azerbaijani gas as part of the first stage of developing the Shah Deniz gas condensate field was signed on May 12, 2001 for 15 years, according to a statement posted on the website of the Turkish state pipeline company Botas. Turkey and Iran signed a contract for the annual supply of 10 billion cubic meters of gas on August 8, 1996. The contract duration is 25 years.
Ankara appealed to the International Court of Arbitration regarding the price on Iranian gas in March 2012. Turkey’s case against Iran concerning prices on supplied gas will be considered at the International Court of Arbitration before the end of 2014.


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