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Iran and Turkey need to form new natural gas deal to gain price discounts

Iran and Turkey need to form new natural gas deal to gain price discounts

ANKARA: Iran and Turkey need to form a new natural gas deal to gain price discounts in the gas trade, Iranian Ambassador to Turkey Alireza Bikdeli said on late June.

Speaking to members of the Economy Journalists Association in Ankara, Bikdeli discussed possible solutions to the natural gas price dispute between Turkey and Iran.

Turkey will buy more natural gas from Iran. In return, Iran will make a certain amount of discount. We have accepted this formula. However, for this to be realized, a new gas deal has to be made between the two countries,” Bikdeli said.

Iran, the second largest gas supplier to Turkey, supplies 10 billion cubic meters of natural gas every year to Turkey at a cost of $487 per 1,000 cubic meters.

Meanwhile, Turkey pays $418 per 1,000 cubic meters to Russia and $340 to Azerbaijan for the same amount of gas, thus making Iran the highest priced supplier of Turkish gas imports.

Turkey has repeatedly objected to the high cost of Iranian gas and demanded a discount by taking the case to the International Court of Arbitration (ICA).

“Both countries have the right to appeal the case to the arbitration court in order to determine the price of gas,” Bikdeli said.

“However, Iran and Turkey should make a new gas trade agreement, which should be ratified by both countries’ parliaments,” he added.

Turkey had first taken the gas deal to the court in 2005, when the court ruled the Iranians should pay $900 million in compensation and a 16 percent discount in the price deal.

In February 2014, both sides confronted each other again, when Turkey brought its 25 percent discount to the ICA once again.