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Iran to pay $1.9B to Turkey in gas dispute

25 January 2017 10:59 (UTC+04:00)
Iran to pay $1.9B to Turkey in gas dispute

By Kamila Aliyeva

The Islamic Republic of Iran will pay $1.9 billion in compensation to Turkey after losing a gas price dispute case brought by Turkey before the International Court of Arbitration.

Iran’s Deputy Petroleum Minister Hamid Reza Araqi said that the two countries also agreed on a 13.3 percent discount on the prices of gas delivered from Iran to Turkey, Anadolu Agency reported on January 24.

Back in 1996, Iran and Turkey inked a 25-year deal on supplying 30 million cubic meters of gas to Turkey per day.

In 2012, Turkey sued Iran at the International Court of Arbitration for overpricing gas purchases during the period between 2011 and 2015.

Turkey claimed that the prices at which the gas was brought from Iran were above international prices and had to be reduced by 35.5 percent. The Court agreed to a reduction of 13.3 to 15.8 percent on gas purchased from Iran in 2011- 2015.

The court ruled in favor of Turkey in February 2016 and ordered that both parties agree on a reduction between the rates of 10 percent and 15 percent in the price of Iranian gas exports to Turkey.

Iran is the second largest gas exporter to Turkey, after Russia, which supplies almost half of the country’s needs.

Over the last decade, Turkey has been the second country, after China, in terms of natural gas and electricity demand growth.

Gas consumption in Turkey stood at 43.6 billion cubic meters in 2015, according to the BP Statistical Review of World Energy 2016. It accounted for 1.3 percent of the world's total gas consumption in 2015.

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