Turkey to Receive $1.9b From Iran Over Gas Dispute

Iran will pay $1.9 billion in compensation to Turkey's state oil and gas company Botas following an international tribunal ruling that Ankara was overcharged for its import of Iranian gas, a top energy official said on Tuesday.

"Iran should pay $1.9 billion in compensation to Turkey. This amount will be paid in installments," Hamidreza Araqi, the chief executive of National Iranian Gas Company was quoted as saying by Mehr News Agency on Tuesday.

Government officials had previously placed the amount of compensation at around $1 billion.

Iran signed a contract in 1996 to export up to 10 billion cubic meters of gas per year to Turkey over 25 years. But Botas appealed in March 2012 to the International Court of Arbitration saying that Tehran had overcharged.

The court ruled in Nov. that Iran supplied gas to Turkey at a higher price compared to other producers in the region and must cut its exported gas price by approximately 13%.

Iran, which started selling gas to Turkey in 2001, is the second largest gas supplier to the  country after Russia, delivering 10 billion cubic meters annually. 

The price of Iranian gas was not officially disclosed, but according to media reports, it was higher than the price of Russia and Azerbaijani gas.

"The Turks initially sought a 25% reduction in Iran's gas price, but the two sides eventually settled on 13.3%," Araqi said.

In other gas related news, he said Tehran will soon legal proceedings against Turkmenistan for its unacceptable move to cut gas supplies to Iran last month.

"We have opened a window of negotiation for Turkmens to try and settle financial disagreements (with Iran), but we will take them to the international court if they don't take action," said the official. 

Turkmenistan halted natural gas exports to Iran last month in a move to pressure Tehran to clear its debts for past gas purchases from the Central Asian neighbor.

Ashgabat had once before stopped gas supplies to Iran in 2007 when the country was gripped by unseasonably cold temperatures. The move forced Iran to import Turkmen gas at a price that was nine times higher than what was stipulated in a bilateral contract.