Turkey Wins Gas Price Discount Against Iran in Court

Source: Kodda/ Shutterstock

Source: Kodda/ Shutterstock

According to the Shana News Agency, The International Court of Arbitration has ruled against Iran in its gas dispute with Turkey, ruling a 10-15% discount in Turkey’s favour.

The managing director of the National Iranian Gas Company, Hamid-Reza Araqi, was quoted by Reuters on February 2nd as stating that “The International Court of Arbitration has ruled a 10-15 percent of discount for the gas supplied to Turkey during 2011-2015.”

Turkish Energy Minister Berat Albayrak confirmed that the court has ruled in favour of Turkey, which is expected to receive a 13.3-15.8% discount.

Albayrak told journalists in Chile that the “The International Arbitration Court has recently made a decision in the favour of Turkey. We’ll most probably receive a discount this year, which is very good for us. We plan to have a discount in gas prices this year.”

However, the National Iranian Gas Company (NIGC) has stated that the claim for price revision with Turkey’s gas grid company, BOTAŞ, is still undergoing an investigation by the Arbitral Tribunal, which has yet to make a final decision.

In a press announcement on February 2nd, the NIGC stated “The news which has been published recently by some news agencies in Iran does not reflect the final decision of the Arbitral Tribunal and the NIGC is still awaiting the final decision of the tribunal. The final decision will be announced by the NIGC in due course. The NIGC still remains firm on the current gas price and believes that the gas export price is reasonable.”

Turkey buys around 10 billion cubic meters (bcm) of gas from Iran. The country filed two separate cases against Iran in 2012, one for excessively high gas prices and the other over deficiencies in gas distribution. In the second case, the court ruled in favour of Iran.

In this context, Iran proposed to double exports of its natural gas for a discount last year, but Ankara rejected the offer. However, the Turkish Energy Ministry stated in 2015 that Iran refused to make any cuts in the price of gas exports, but offered to open a new gas line of around 10 bcm supply at a cheaper price, which Turkey deemed as “unacceptable.”

In 2004, Turkey’s BOTAŞ was awarded a discount of 16.5 percent against Iran.

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