Will Turkmen gas supplies to Iran be resumed?

Victoria Panfilova, columnist of Nezavisimaya Gazeta, specially for Vestnik Kavkaza
Will Turkmen gas supplies to Iran be resumed?

Iranian Foreign Minister Mohammad Javad Zarif visited Ashgabat on Monday. During his talks with Turkmen President Gurbanguly Berdimuhamedov, the issues of resuming Turkmen gas imports to Iran, settling debts for previously supplied gas and reducing gas prices were discussed. However, as Vestnik Kavkaza has learned, Berdymukhamedov and Zarif failed to agree on these issues.

"Iran is facing unprecedented pressure from international sanctions," Iranian President Hassan Rouhani, said a few days ago. He explained that sanctions on banking ties have imposed additional expenses on Tehran's financial transactions. Those problems also affect the petrochemical, oil, agricultural and steel industries. According to him, "Iran is under a difficult situation now, but we should not get disappointed.".

Against this background, the Iranian delegation led by Foreign Minister Mohammad Javad Zarif arrived in Turkmenistan to hold talks in the political, commercial, transport, energy and customs spheres. However, the main issues at the talks in Ashgabat were the issues of resuming Turkmen gas supplies and debt restructuring. Iran should pay Turkmenistan somewhere around $2 billion for gas supplies in 2007-2008. Because of the cold weather, Iran was forced to increase the volume of Turkmen gas imports. Ashgabat, taking advantage of the situation, increased the gas price from $40 to $360 for every 1,000 cubic meters. Tehran offered to recalculate the received additional gas volumes at the same price, but Ashgabat refused, and unilaterally stopped gas supplies to Iran in January 2017 in violation of the 25-year agreement. Unable to agree on the issue, the parties filed claims against each other in the International Court of Justice.

The parties cannot reach a compromise. "Ashgabat insists on paying the debt for gas supplies. Tehran insists that there is no debt, but if it exists, the debt is scanty, and if the recalculation confirms its existence, the Iranian side will pay in consumer goods. Being plunged into a deep economic crisis, Turkmenistan needs money. Ashgabat offers Tehran to pay $350,000 in cash and close the issue," Doctor of Political Sciences, Deputy Director General of the Center for Strategic Estimations and Forecasts Igor Pankratenko told Vestnik Kavkaza. The expert explained Tehran’s insistence in trying to resume gas supplies by the fact that Iran’s northern provinces still need gas supply. He described the reports on the Damgan-Neka pipeline, designed for pumping 40 million cubic meters of gas per day for the northern provinces of Iran, as a fiction.

Tehran is also nervous about the construction of the Trans-Caspian gas pipeline to supply Turkmen gas to Europe. The signed Convention on the Legal Status of the Caspian Sea makes it possible to build this pipeline and connect it to the Southern Gas Corridor. There are almost no legal obstacles. The issue of laying pipelines should be decided between the countries where it will run - Azerbaijan and Turkmenistan. But, as head of the Center for Central Asia and Caucasus Studies at the Russian Academy of Sciences Stanislav Pritchin told Vestnik Kavkaza, Iran could stand in the way of Turkmen gas. "Those procedures that are spelled out in the convention and in the environmental impact protocol are negotiable, on the one hand, but on the other - prohibitive. The question whether Iran can block the transit of Turkmen gas remains open. It's a long story. It is more profitable for Turkmenistan to negotiate with Iran both in terms of diversifying its supplies and in terms of building pragmatic relations with neighboring countries. Ashgabat does not have many neighbors to rely on. And Iran is one of them," Pritchin said.