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Turkey, Iran fail to secure gas price deal, agree to new talks

Iranian President Hassan Rouhani salutes before he addresses a Turkish-Iranian bussines forum in Ankara, Turkey, Tuesday, June 10, 2014. (AP Photo)

ANKARA: Ankara and Tehran have failed to reach a deal on the pricing of Iranian gas imports to Turkey but will meet again for further talks, officials said Tuesday.

Turkey is one of the largest customers for Iranian oil and a major buyer of its natural gas, with about a fifth of its gas supplies coming from Iran. Ankara is seeking a discount on gas prices, arguing that they are unsustainable.

“Turkey purchases the most expensive natural gas from Iran among other suppliers,” Energy Minister Taner Yildiz told reporters on the sidelines of a business forum in Ankara attended by Iranian President Hassan Rouhani.

“We believe Iran will go for a discount on the price of the gas because we told them that this is not sustainable,” he said.

Turkish and Iranian ministers held extensive talks late Monday on the issue but officials said Tehran has so far refused to slash its prices.

Yildiz said an Iranian delegation would visit Turkey next week for further discussions.

“The talks will continue to hammer out a formula on the pricing,” said a spokesman for the Iranian embassy in Ankara.

“I believe the two sides will find a common ground but I don’t know when,” he told AFP.

Energy imports are one of the major reasons for Turkey’s high current account deficit – a weakness that leaves the country’s economy vulnerable to global financial turbulence.

Turkey’s state-owned pipeline company BOTAS lodged a complaint against Iran at an international court in Switzerland in 2012, arguing that the price paid to Iran for gas imports was too high.

Yildiz said Tuesday that he hoped the case would be concluded by the end of this year.

Turkish officials say Iran has called on Turkey to drop the arbitration case at the Swiss court in return for talks on the price of the natural gas, but Ankara has insisted on having the pricing negotiations proceed independent from the court process.

Prime Minister Recep Tayyip Erdogan said Monday that Turkey was ready to increase gas shipments from Iran once the dispute is settled.

The two countries are keen on boosting their bilateral trade from around $14.5 billion in 2013 to $30 billion in 2015.

“Political risks are diminishing in Iran, which offers a unique opportunity for investors,” Rouhani told the business forum in Ankara.

Despite their differences on some regional political conflicts including Syria’s civil war, Iran and Turkey have taken steps to mend fences since Rouhani’s election last year which has seen Tehran open the door for dialogue with the West and renew talks with world powers on its contentious nuclear program.

Turkey, which is bound by U.N. sanctions against its eastern neighbor, is a fierce opponent of Western measures that have severely curtailed its access to Iranian fuel in recent years. It is urging a resolution to the nuclear dispute before the July 20 deadline.

 
A version of this article appeared in the print edition of The Daily Star on June 11, 2014, on page 6.

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Summary

Ankara and Tehran have failed to reach a deal on the pricing of Iranian gas imports to Turkey but will meet again for further talks, officials said Tuesday.

Turkey is one of the largest customers for Iranian oil and a major buyer of its natural gas, with about a fifth of its gas supplies coming from Iran.

Turkish officials say Iran has called on Turkey to drop the arbitration case at the Swiss court in return for talks on the price of the natural gas, but Ankara has insisted on having the pricing negotiations proceed independent from the court process.


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