Iranian Oil Minister Bijan Namdar Zanganeh described as “acceptable” the International Court of Arbitration’s ruling on a cut in the price of gas that Iran sells to Turkey, but noted that the amount of the fine that Iran has to pay falls below Turkey’s expectations.
Zanganeh announced on Thursday that the court has informed Turkey of its final decision, noting that the result is different from what Ankara had been expecting.
The minister declined to announce the exact amount of the fine, saying it is confidential.
However, Zanganeh added, the amount of the penalty is still negotiable, noting that Turkey will not be allowed to ask for any price reduction or change in the price formula of the gas exported from Iran for the next couple of years.
According to the oil minister, Turkish President Recep Tayyip Erdogan had asked Iranian President Hassan Rouhani at a meeting for a 40-percent cut in the price of gas, saying the case ultimately came before the court after the failure of direct Tehran-Ankara negotiations because of the unreasonable Turkish expectations.
Ankara had applied for an International Court of Arbitration on the pricing which it deemed too expensive. Turkey’s state-owned Petroleum Pipeline Corporation (BOTAS) took the case to the court in 2012.
Managing Director of National Iranian Gas Company (NIGC) Hamid Reza Araqi said on Tuesday that the court has ruled in favor of Turkey, and Iran should now pay penalties.
He had noted that based on the court’s ruling, Iran should reduce its gas price 10 to 15 percent.
The exact amount of money Iran should pay to Turkey is not small, Araqi said, predicting that it could amount to some $1 billion.
Iran is Turkey’s second supplier of gas after Russia, providing for one-fifth of the country’s consumption. Azerbaijan is another supplier.