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Iran announced it has reached agreements for transiting gas from Turkmenistan to Turkey as well as exporting gas to Europe via Turkey.

National Iranian Gas Company's managing director Javad Owji told the Mehr news agency on Saturday that Iran and Turkey have recently agreed on transiting Iranian gas to European markets. According to the agreement, Iran will export gas to Europe via Turkey, and will transit the same amount of Turkmen gas to Turkey instead.

However, no official from Turkmenistan, Turkey or the EU has confirmed Iran's agreement.

Earlier, on September 1, Iranian Oil Minister Rostam Qasemi said his talks with Turkish Development Minister Cevdet Yilmaz that took place on the sidelines of the Non-Alignment Movement Summit in Tehran had positive results for increasing gas exports from Iran to Turkey as well as transiting Iranian gas to Europe via Turkey, although neither Turkish media nor officials commented on the issue of gas talks with Iran.

History of gas talks

Iran and Turkey inked a memorandum in November 2008 to transit Iranian gas via Turkey to European Union member states. According to the agreement, the privately-owned Turang Transit company of Turkey was expected to invest $12 billion to build a pipeline dubbed "Iran-Turkey-Europe".

During Turkish Prime Minister Recep Tayyip Erdogan's visit in late December 2010 to Tehran, the Turkish company TPAO signed an agreement for transiting Turkmen gas via Iran to Turkey as well as exporting Iranian gas to Europe via Turkey, but according to Turkish Energy Minister Taner Yildiz, the two sides decided to negotiate on pricing terms in the future.

However, in past months Yildiz has not spoken about boosting the volume of Iranian gas imports and transiting Iranian gas to Europe. He just raised the two issues of complaining at Iran in international courts over the Islamic republic's not committing to export 10 billion cubic meters of gas to Turkey based on the 1996 agreement, and the discontent of Turkey with the pricing of Iranian gas exports to Turkey. According to BP, Iran exported only 8.4 billion cubic meters of gas to Turkey in 2011.

EU economic advisor Mehrdad Emadi told the Baku-based Trend news agency that Iran has held talks with companies from Spain, Cyprus, Greece, and Switzerland as well as the European branch of Russian Lukoil during the past one and a half years regarding gas exports. "The negotiations were not fruitful, so, no European company is after buying Iranian gas," Emadi said.

He pointed out that the recent talks among Iran, Turkey, and Turkmenistan were aimed to find a way to compensate the shortage of Iranian gas exports to Turkey using Turkmen gas, not transiting Turkmen gas via Iran to Turkey and Europe.

Iran sells gas to Turkey at $500 per 1,000 cubic meters. Russia and Azerbaijan export gas to Turkey for $400 and $300, respectively.

According to statistics, Iran exported a total of about 9 billion cubic meters of gas in 2011 to Turkey and Armenia.

Iran's gas output stood at 152 billion cubic meters last year, while domestic consumption exceeded 153 billion cubic meters. This issue is seemingly the main reason for Iran's not committing to sell 10 billion cubic meters of gas to Turkey per year.

Iran-Europe gas transit routes

There are two potential routes for transiting Iranian gas to Europe via Turkey according to proposed projects: Nabucco West pipeline and Trans Adriatic Pipeline (TAP). One of the two pipelines is projected to join the Trans-Anatolian gas pipeline (TANAP), which is designed to stretch from eastern Turkey to its European Union border.

TANAP is aimed to pump 16 billion cubic meters of gas from Azerbaijan to Turkey and EU countries during the first phase. The project is to be launched by 2018. Natural gas will be injected from Azerbaijan's Shah Deniz field to the pipeline. The final throughput capacity of the pipeline is to be increased to 31 billion cubic meters by 2026.

Both TAP and Nabucco have rejected transiting Iranian gas to the EU.

Turkmenistan's gas export policies

Turkmenistan pursues a policy of delivering gas to buyers at borders. Although Turkmenistan is exporting gas to Russia, China and Iran, it neither participates in building gas pipelines, nor does it take the responsibility of probable disruptions of supplies overseas.

According to BP, Turkmenistan holds 24.3 trillion cubic meters of natural gas -- the fourth largest natural gas reserves -- and produces some 60 billion cubic meters of gas annually.

Domestic consumption of gas amounts to 25 billion cubic meters. Also, the Central Asian state exports 10.1 billion cubic meters of gas to Russia, 10.2 billion cubic meters of gas to Iran, and 14.3 billion cubic meters to China per year.