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Tehran, Ashgabat in Energy Swap Talks Amid Gas Row

Iran and Turkmenistan seek a deal to jointly export natural gas to Persian Gulf littoral states
Turkey and Iraq are the biggest customers of Iran's natural gas.Turkey and Iraq are the biggest customers of Iran's natural gas.

Tehran and Ashgabat are in talks on swapping Turkmenistan's hydrocarbons through Iran, despite being embroiled in a gas row that has lingered since last year.

Hamidreza Araqi, the head of National Iranian Gas Company, said negotiations are underway with Turkmenistan to receive the country's natural gas and deliver the same amount to Armenia and Azerbaijan that share borders with Iran in the northwest.

"We are averse to swapping Turkmen gas with Turkey and Iraq, but we have no problem with Azerbaijan and Armenia," Araqi was quoted as saying by IRNA on Saturday.

According to the official, Turkey and Iraq are the biggest customers of Iran's natural gas and Tehran does not want to stoke unwanted competition for its regional gas market.

Turkey is in a deal to take in up to 30 million cubic meters of Iranian gas per day while Iraq, which began to import Iran's gas in June, is currently receiving 12 million cubic meters a day.

Iran is transferring gas to Baghdad for power generation.

Araqi hoped that exports to the southern city of Basra will take place likely in March, the end of the present fiscal year.

Iran and Turkmenistan are also seeking a deal to "jointly export natural gas to Persian Gulf littoral states", the NIGC chief added without elaboration.

Iran is pursuing plans to build gas liquefaction facilities across its southern shores by the Persian Gulf to diversify gas exports that are limited to a few countries through pipelines.

The country recently began swap operations after unilaterally ending its energy swap deals in 2010, amid intensifying tensions with the West over its nuclear program.

In August, a Russian-flagged tanker discharged around 7 million liters of Turkmen-origin crude oil at the port of Neka for swapping through the Persian Gulf, marking the first such operation in seven years.

Swap talks with Turkmenistan come, as Iran has threatened to take its northeastern neighbor to court after it cut gas supplies to Iran late last year to force higher payment for its natural gas.

Araqi said in a statement last week that Iran prefers to discuss and settle the gas row outside of court in a shift of tone that signaled Tehran's willingness to put aside differences with Turkmenistan.

Iran's gas production capacity exceeded 800 million cubic meters per day this year. It exports the fossil fuel to three neighboring states, namely Turkey, Armenia and Azerbaijan, via pipelines.

Ankara receives more than 90% of gas exports under a long-term contract, and Yerevan and Baku receive around 6% and 3% respectively under swap agreements.

Iranian officials have for years promoted the idea of laying and extending a gas pipeline through Azerbaijan or Armenia through Europe, but the scheme has not taken off due to financial reasons as well as complications of bringing together several nations to execute a multibillion-dollar joint venture.

Iran has reportedly considered eight gas export routes to Europe with an annual capacity of 25-30 billion cubic meters a year.

 

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