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    Turkmenistan: talk or arbitrate

    January 03, 2017

    Turkmenistan is ready to continue talks with Iran after cutting gas supplies to Tehran January 1, but also has the right to take the dispute over past payments to arbitration, the Turkmenistan Foreign Ministry said last Thursday.

    In a statement, the ministry said Iran’s debt stemmed from the National Iranian Gas Company’s failure to abide by the “take-or-pay” provision of the gas supply contract, which means that if the buyer fails to take the minimum amount of gas listed in the contract, the buyer must still pay for that gas.

    Tehran said in December that Turkmenistan had threatened to stop gas exports because of arrears in payments, which amounted to about $1.8 billion and dated back more than a decade.

    Iran has major gas fields in the south of the country but has imported gas from Turkmenistan since 1997 for distribution in its northeastern provinces, especially during the winter, because that is cheaper.  Turkmenistan has gas fields just across the border from Iran.

    Turkmenistan in turn faces a foreign currency shortage after Russia, once a major buyer of its gas, halted purchases last year, leaving China as its biggest customer—and now, after cutting gas sales to Iran, its sole customer.

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