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News // Incidental

Iran may apply to international arbitration over gas dispute with Turkmenistan

09 January 2017 , 10:31Neftegaz.RU549

The National Iranian Gas Company (NIGC) said on January 6, 2017, that it would apply to international arbitration over the stoppage by Turkmenistan of its natural gas export to Iran.

 

Turkmenistan halted natural gas supplies to Iran on January 1, 2017, in a dispute between the 2 countries over unpaid arrears.

NIGC said in a statement on January 4 that over the course of the recent years, it has cleared all its dues and a part of the debt arrears to Turkmenistan’s state gas company Turkmengas in different ways amounting to over $4.5 billion. «What remains to be paid by NIGC is related to the sanction period. Moreover, even in that period in spite of the impossibility of direct payment due to international sanctions, by the agreement of the Parties, huge amounts were paid to Turkmengas in the form of exporting goods and services,» the Iranian company said.  

 

NIGC also said that even in the case of existence of a debt or delay in payment, Turkmengas shall not be allowed to cut off gas delivery to Iran and such a stoppage shall be a «material breach of the Contract».

«The gas company of Turkmenistan has cut gas exports to Iran, contrary to the agreement reached, by demanding immediate payment of arrears,» the National Iranian Gas Company said in a statement following the gas supply stoppage.

 

Iran has imported natural gas from Turkmenistan since 1997 for distribution in the north of the country.

Ashgabat claimed that Iran owed it $1.8 billion from sales between 2007 and 2008 when freezing winters led to severe shortages across 20 Iranian provinces, forcing the country to raise gas imports from its northeastern neighbor, Iran’s PressTV  reported.

According to NIGC, Iran currently produces 700 million cubic meters of gas per day and the import from Turkmenistan is only 2% of the country’s gas production.

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