According to the natural gas purchase contract between Turkey and Iran, Turkey has to buy at least 6.8 billion cubic meters of natural gas from Iran annually. (Photo: Today’s Zaman)
17 January 2012 / TODAY’S ZAMAN, ANKARA
Turkey is preparing to sue the Iranian government because the latter has declined to reduce the price of natural gas it sells unless a consensus is reached by the end of this week, Energy and Natural Resources Minister Taner Yıldız told reporters in Ankara on Monday.
Yıldız said the Turkish government had earlier requested that Iran discount the price of natural gas Turkey buys from this country; however, the eastern neighbor rejected this demand. “We carried out a comprehensive study that determined that the amount of money we pay Iran for natural gas is too high. … We shared this with Iranian officials, but apparently they disagree with us,” Yıldız explained. Underlining that the government has to “protect the public interest” in any international agreement, Yıldız said the government has considered taking the issue to an international court of arbitration. “We are determined to take this step unless a desired solution is reached with Iran,” the minister said, adding that the Turkish side is ready to sit down to discuss the issue once again before the end of this week. Turkey depends on Iran for one-third of its natural gas imports.
At the end of last year Turkey experienced a similar problem with another major gas provider, Russia. The Russian government agreed to lower the price of natural gas it sells after Turkey agreed to a key natural gas pipeline that will carry Russian gas to European markets via Turkey’s territorial waters in the Black Sea.
High gas prices aside, Turkey, a net energy importer, is also facing challenges due to a much discussed “take or pay” condition that requires the country to import predetermined amounts of natural gas in almost all of its natural gas import agreements. According to the natural gas purchase contract between Turkey and Iran, Turkey has to buy at least 6.8 billion cubic meters of natural gas from Iran annually. This means Turkey has to pay Iran a specified amount of money irrespective of whether it needs that amount of natural gas. A similar situation exists for the supply of natural gas from Russia. Although the payments can be used in lieu of natural gas acquired in the future, there is a five year limit after which the amount paid cannot be used to obtain natural gas. In a time of poor domestic natural gas consumption, the Turkish Pipeline Corporation (BOTAŞ) is wondering whether it will be able to consume the (unused) natural gas that it has paid for.
Meanwhile, the minister told reporters that German energy firm E.ON AG is mulling over making investments in Turkish markets, preferably with Turkish partners. As regards an electricity cut experienced in large Western provinces due to snowfall, the minister said they are working hard to avoid a repetition of the problem; however, he added, “New cuts are possible if weather conditions get worse.”
via Turkey prepares to sue Iran over ‘too high’ gas prices.
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