Roundup: Iran, Turkey Defuse Haggle over Energy Trade

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Last updated at: (Beijing Time) Saturday, October 12, 2002

Roundup: Iran, Turkey Defuse Haggle over Energy Trade

Mideast energy supplier Iran and importer Turkey have defused a row over gas dealings after Turkish Energy Minister Zeki Cakan recently paid a visit to Tehran.

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Mideast energy supplier Iran and importer Turkey have defused a row over gas dealings after Turkish Energy Minister Zeki Cakan recently paid a visit to Tehran.

After talks, the Turkish energy czar signed a memorandum of understanding (MOU) with his Iranian counterpart Bijan Zangeneh andthe two sides agreed to resume flow of Iranian gas in the near future.

According to the memorandum, the two sides will undertake to prepare necessary documents for the reopening of gas flow.

The signing of the document put a lid on their five-month hassle, which was allegedly linked to Russia's offer of lower gas prices.

The Turkish side, however, rejected the Iranian allegation that Turkey was pushing for a price cut after getting a 9 percent discount from Russia.

Ankara instead attributed the issue to the quality of Iranian gas, which it said was not in line with contract requirements.

Iran and Turkey had launched a 2,577-km pipeline last December, which runs from Iran's northeastern city of Tabriz to Ankara.

Under a previous deal of 30 billion US dollars, Iran would initially supply 3 billion cubic meters of gas a year and increase it gradually to 10 billion cubic meters in 2007.

The Ankara-Tehran spat culminated in a halt to Turkey's import of Iran's natural gas via the pipeline on June 24.

The Turkish-Iranian MOU came as a relief of pain for Iran's reformist President Mohammad Khatami, who calls for Iran's switch from crude selling to non-oil exports, including gas, as a remedy for Iran's ailing economy.

Iran, among others, is keen to secure the Turkish market as an outlet for its gas exports to Europe.

Ranking second worldwide after Russia in natural gas deposits, Iran's whopping 20,000 billion cubic meters of natural gas accountsfor 18 percent of the world's proven reserves, making the country asupplier long favored by energy-strapped neighbor Turkey and an increasingly bigger consumer of Europe.

Iran is looking to the potential purchasing power in the European market and has stepped up efforts in lobbying for Europe'sfavor on Iranian energy, following the start of pumping gas to Turkey, a bridge linking the two sides.

Iranian Deputy Oil Minister for Parliamentary Affairs Mahmoud Astaneh said on Wednesday Iran is aiming to gain access to lucrative gas market in Europe and it is imperative for Iran to reach this goal by extending the pipeline via Turkey.

In a report on global energy trends, Fatih Birol, a chief economist of the International Energy Agency (IEA), said recently Iran would become a major gas supplier to the European Union (EU) in the future, and an existing gas pipeline between Iran and Turkeycan be extended to Europe.

Birol forecast an great increase in Iran's gas exports to the European Union, citing the fact that EU's net gas imports would jump from the current 44 percent to 81 percent of the total supply by 2030.

Meanwhile, Iranians view the Iran-Turkey-Greece pipeline as the most efficient and cost-effective way for the Europeans to import Iranian gas, compared to the shipment of liquefied natural gas by tankers or a pipeline through the Commonwealth of Independent States to Europe.

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