Iran will win again an arbitration case brought by Turkey for reduced gas prices after Ankara’s first attempt was quashed by the International Chamber of Commerce in Switzerland in 2014, an energy official predicted on Saturday.
Turkey imports about 10 billion cubic meters of gas a year from Iran under a 25-year deal signed in 1996 but it has applied for an international court of arbitration on the pricing which it deems too expensive.
“Given that the outcome of the first arbitration in the gas dispute was announced in Iran’s favor, the circumstances for the announcement of the second result will be also in Iran’s favor to a great extent,” head of the international liaison office at the National Iranian Gas Company Azizollah Ramezani said.
The outcome of the arbitration has positively affected Iran’s gas industry, strengthening the country’s position as a reliable source of energy, the official said.
“Perhaps, it is one of the reasons behind recent visits by foreign companies to Iran for gas negotiations.”
As many as 170 foreign companies held gas negotiations with Iran last year, head of the National Iranian Gas Exports Company Alireza Kameli said on Friday.
Iran is Turkey’s second supplier of gas after Russia, providing for one-fifth of the country’s consumption. Azerbaijan is another supplier.
Turkey says Iran’s price is too high, charging $490 for every 1,000 cubic meters versus $335 and $425 by Azerbaijan and Russia respectively.
During an April visit to Tehran by President Recep Tayyip Erdogan, Iran offered to double natural gas exports in return for a price cut which was turned down by Turkey.
Iranian President Hassan Rouhani (R) receives his Turkish counterpart Recep Tayyip Erdogan in Tehran in April.
Turkey’s state-owned Petroleum Pipeline Corporation (BOTAS) took the case to the court of international arbitration in 2012 for a ruling on the price. The case is still pending, with Ankara making a second effort for a ruling.
Ramezani said, “The court of international arbitration’s ruling is attentive to absolute rejection of BOTAS’s claims and acceptance of the defense made by the National Iranian Gas Company and Iran is in fact the relative winner of the dispute.”
Despite the row, the Turks acknowledge Iran as a reliable source of energy, which could meet a substantial portion of Ankara’s needs for natural gas, the official said.
Commercial ties between the two neighbors remain strong. Trade volume stood at $14 billion last year which the two countries plan to raise to $30 billion.
During President Erdogan’s visit to Tehran, Iran and Turkey signed eight documents to expand cooperation and boost trade.