ANKARA
Turkish Energy Minister Taner Yildiz's recent statements that Ankara will proceed with its arbitration process with Iran until Tehran agrees to a gas price revision has brought the issue back to the forefront.
In 2004, Turkey’s Petroleum Pipeline requested a price revision from Iran on imported natural gas, due to Iran’s failure to fulfill its obligations on quantity and quality during the winter season. The negotiations on a reduction were conducted by Yildiz to decrease the level of "take or pay" gas purchases, which penalizes Turkey if it does not purchase a certain amount over a period of time.
Iran refused the requests and took Turkey to court in 2005.
The International Chamber of Commerce (ICC) in Switzerland has acted as a mediator in the dispute after a number of interruptions in gas supplies. A 20-day supply freeze in January 2008 was the most critical. The first arbitration case ended in 2009 and ruled that Iran did not fulfill its obligations in the contract. The ICC awarded Turkey US$800 million in compensation.
In 2012, Turkey applied to the ICC for a revision on natural gas sales as Ankara considered the price to be unfairly high.
As of 2013, Turkey pays Azerbaijan US$349 for every cubic meter of gas and $429 to Russia for the same amount. Iran sells gas to Turkey for $507 per cubic meter.
Yildiz visited Iran in January 2014 and unsuccessfully attempted to negotiate an end to the deadlock.
"The price we pay for Iranian gas is above international standards."
Turkey imports 10 billion cubic meters of Iranian gas per year, its biggest supplier after Russia.
englishnews@aa.com.tr
