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News // Incidental

Iran: No penalties in gas trade with Turkey

29 May 2017 , 15:26Neftegaz.RU441

Iranian Minister of Petroleum Bijan Zangeneh sternly denied on May 28, 2017, rumors that the Islamic Republic has been ordered by an international court to undergo penalties for overcharging Turkey for its gas.

 

Speaking to reporters in Tehran, the official made it clear that the prices in the gas deal with Turkey have been modified and no penalties have been imposed in the contract.

Asked about rumors that Iran is under-pricing its gas to Turkey, he said: «This is a blatant lie. We have not been penalized.»

 

The international court of arbitration in 2012 issued a ruling for a 12% drop in the gas contract which was objected by the Turkish side who demanded a 25% fall in the quality of the gas and 37.5% decrease in its price, he said.

Turkey had demanded a 62.5% decrease in the price of gas from Iran which was reduced to only 13% after years of discussions, the official added.

 

«A period of 9 months was designated by the court for Turkey to enforce the ruling and we had to pay them the extra cash.»

He said such things do happen in contracts, adding what matters is that we could minimize their demand from a 62% drop in the gas price to 13%.

 

In 1996, Iran and Turkey signed a 25-year gas deal for export of up to 10 billion cubic meters of Iran's natural gas to Turkey.

In recent years, Ankara has filed 2 suits against Iran in the international arbitration court for the volume and price of the gas.

 

The case regarding gas volume was overruled immediately but in the 2ond case, the court of arbitration ruled against Tehran.

 

Now, Iran will have to pay the Turkish side nearly 13% of the price of gas it sold Turkey between 2011 and 2015 as compensation, according to the verdict.

Iran will pay this in the form of gas contracts rather than cash.

 

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