Turkey Rejects Iran's Gas Proposal
While Iran is attempting to boost its gas exports in coming years, two potential customers are in conflict with Iran while Iran's gas delivery to Iraq and Pakistan remains under question.
Iranian Oil Minister Bijan Namdar Zanganeh announced on 14 April that Tehran offered Ankara a doubling of Iranian natural gas imports for getting a discount in gas prices however Ankara rejected the offer.
On the same day, Oman’s Minister of Oil and Gas, Mohammed Al Rumhy, said that Tehran and Muscat have yet to agree on the route of a 260km underwater pipeline to carry Iranian gas to Oman.
“The first part is to agree on the route. Once we agree on the route we will move onto the second phase, which is the design of the pipeline itself,” said Al Rumhy.
Based on a preliminary deal signed between Iran and Oman in 2013, the two sides agreed to start necessary operations to start the exports in two years.
The volume of exports to be provided from Iran’s Kish gas field would be 10 billion cubic meters per year, equivalent to Iran's current gas delivery level to Turkey.
Turkey filed two complaints with the International Court of Arbitration accusing Iran of overcharging as well as citing the low quality and quantity of delivered gas. Minister Taner Yıldız said earlier that the court is set to issue its final verdict on the dispute in May.
Iran increased gas deliveries to Turkey by one billion cubic meters of gas per annum (bcm/a) during last year. Iran, Russia and Azerbaijan export about 10 bcm/a, 27 bcm/a and 6.6 bcm/a to Turkey respectively. Turkey purchases 1000 cubic meters of Iranian gas at $490, which is much higher than Russian gas (at $425) and Azerbaijani gas (at $335).
Zanganeh said that the International Court verdict about Turkey's claim on the gas quality-quantity was in favor of Iran, but the release of the second verdict is expected in two months.
Regarding Turkey's demand of at discount, Zanganeh said that Iran offered to double gas delivery to Turkey instead of a discount, but Ankara rejected.
Iran also postponed delivering natural gas to Iraq in restricted volume, which was scheduled to start in mid-March 2015. Iran says delivering 4 to 5 mcm/d of gas to Iraq will start next month, but for fulfilling the 25 mcm/d gas delivery agreement, it needs the new pipeline be completed from Iran's South Pars gas fields to Iraqi Kurdistan region's borders with Iran. Iran should complete the 6 th cross-country gas pipeline to export South pars gas to Iraq. The first and second sections of this pipeline totalling 611 km in length have been completed and 600 km of piping is to reach Iraqi borders.
The capacity of a 6th cross-country pipeline, projected to cost over $2 billion, will transfer 110 mcm/d of gas to Iraq, Syria, Lebanon and Europe.
Iran also had an agreement with Pakistan to start delivering the natural gas in January 2015, but the construction of pipeline hasn't started in Pakistani territory yet.