December 25, 2015
Th Islamic Republic says an arbitration court ruling on whether Iran overcharges Turkey for natural gas is expected to be handed down in mid-January, resolving a years-long dispute.
The director of international relations at the National Iranian Gas Company (NIGC), Azizollah Ramezani, said the ruling by the International Court of Arbitration (ICA), a part of the International Chamber of Commerce, would be out by mid-January.
“The Turkish side, BOTAS Petroleum Pipeline Corporation, in January 2013 filed two lawsuits at the ICA charging the NIGC with lack of reliability in transferring gas to Turkey and alleging that the gas sold was overpriced,” Ramezani told Shana, the Oil Ministry news service.
The lack of reliability was understood to stem from Iran’s practice of halting deliveries to Turkey during cold spells when demand was very high in northwestern Iran.
Ramezani said that on November 10, 2014, the ICA rejected the case alleging lack of reliability.
In the second case, he said the Turkish firm has complained that Iran’s gas is more expensive in comparison to other sources, citing the global market, Russia’s price, and Turkey’s non-gas energy prices.
In 1996, Iran and Turkey signed a 25-year contract for the export of up to 10 billion cubic meters of gas through a pipeline. It is Iran’s only significant export of natural gas.
Iran appears to be saying that Turkey may not like the pricing formula it agreed to in 1996, but it is nonetheless the formula in the contract and therefore fully legal.
Two years ago, Turkish Energy Minister Taner Yildiz said his country could double the amount of natural gas it imports from Iran if the two countries could agree on a price. Some thought Turkey was holding out the prospect of bigger sales as an inducement to Iran to lower its price.
The then-managing director of the National Iranian Gas Company (NIGC), Hamid Reza Araqi, declined to rise to the Turkish bait. He said Iran would not lower the price of gas exported under the current agreement. But, he said, “We can increase the amount of Iran’s gas exports to Turkey under a new agreement,” hinting the new agreement might embrace a lower price than the current one.