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Turkmenistan Resumes Gas Exports to Iran, Increases Supplies to Azerbaijan

By Nigar Bayramli August 13, 2023

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In January 2017, Turkmenistan halted gas supplies to Iran due to a dispute between Turkmengaz and NIGC. The Turkmen side demanded payment of $1.8 billion owed by Iran over Tehran's failure to pay for the gas it imported between 2007 and 2013. / Business Turkmenistan

Iran resumed gas imports from Turkmenistan, Deputy Minister of Oil and CEO of National Iranian Gas Company (NIGC) Majid Chegeni announced recently.

Test deliveries of 10 million cubic metres of gas from Turkmenistan were successfully completed earlier, Chegeni said at a press conference, according to Mehr News Agency.

Iran further intends to increase imports of Turkmen gas, as well as participate in projects to develop and exploit gas fields in Turkmenistan, he noted.

"We have agreed with the Turkmen side on gas imports under two – short-term and long-term – scenarios," the NIGC head said.

As for the company's debt to Turkmengaz, Chegeni said, "NIGC has repaid the debt by breaking it into three stages."

According to the Chronicles of Turkmenistan, the volume of Turkmen gas supplied under the swap scheme to Azerbaijan via Iran increased from 4.5 to 8 million cubic meters per day.

Swap gas supplies from Turkmenistan to Azerbaijan via Iran with a volume of 4.5 million cubic meters per day began in January 2022.

Azerbaijan needs extra volumes of gas to meet its own domestic demand amidst its growing gas export to Europe. In July last year, Baku signed a memorandum of understanding with the EU to double the volume of gas it sends to Europe through the Southern Gas Corridor to an annual 20 billion cubic meters by 2027, to help diversify gas supplies to the continent.

The volume of Turkmen gas supplied to Azerbaijan via Iran under the groundbreaking swap agreement signed in late 2021 is expected to grow by 70 percent in 2023.

The imminent resumption of gas supplies and an increase in its transit through Iran were discussed during the visit of Chairman of Halk Maslakhaty Gurbanguly Berdimuhamedov to Tehran in May this year.

In June, Chegeni said Iraq paid off its $2.76 billion debt to Iran for gas supplies.

Earlier, Iranian Oil Minister Javad Owji said the amount would be used to pay off Iran's debt to Turkmenistan. He also said that Iran had the capacity to swap and transit up to 50 million cubic meters of gas per day, adding that Tehran was planning to increase its share of gas trade in the region.

In January 2017, Turkmenistan halted gas supplies to Iran due to a dispute between Turkmengaz and NIGC. Iran's debt to Turkmenistan stemmed from a 2020 International Court of Arbitration (ICA) ruling.

In 2018, the parties sued each other in International Arbitration, which in 2020 presumably (neither party disclosed the final decision) sided with Turkmenistan. The Turkmen side demanded payment of $1.8 billion owed by Iran over Tehran's failure to pay for the gas it imported between 2007 and 2013.