Gas Contract With Turkey Unchanged

Gas Contract With Turkey UnchangedGas Contract With Turkey Unchanged

The ‘take or pay’ clause has not been removed from Iran’s contract to export gas to Turkey, deputy oil minister said, also noting that no agreement was reached between the two countries for an increase in gas exports to Turkey.

“No changes have been made to our contract,” Hamid-Reza Aaraghi was quoted by Khabar Online as saying. “Iran is currently exporting gas to Turkey in accordance with the contract.” Negotiations have been held between the two neighbors to increase gas export by five million cubic meters per day, but no new contract was concluded, the official said. Turkey’s minister of energy and natural resources Taner Yildiz told local media in October that Turkey will abandon the “take or pay” principle in gas supplies from Azerbaijan and Iran, in late 2014, and 2015, respectively.

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.

“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. Turkey completely abandoned this principle in gas supplies from Russia in 2013. Iran signed a contract in 1996 to export 10 billion cubic meters of oil per year to Turkey for 25 years.

  Iran Acquitted

In its first decision on Iran-Turkey gas dispute, the International Court of Arbitration ruled against Turkey’s complaint that Iran delivers insufficient amount of gas to the Eurasian country, director of foreign affairs at the National Iranian Gas Company (NIGC), Azizollah Ramezani said, Shana news agency reported Tuesday.

Turkey’s state-owned oil company Botas appealed to the International Court of Arbitration regarding the price and volume of Iranian gas in March 2012, claiming that Iran has reduced the volume of gas export to Turkey by 25 percent without mutual consent. It also claimed that Iran sells gas to Turkey at a higher price compared to prices of other countries in the region. Turkey has demanded a 32.5 percent price cut.