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Iran Stops Gas Imports from Turkmenistan

Thursday 15 November 2012

TEHRAN (Mehr News Agency) – Iran has halted gas importation from Turkmenistan, oil minister Rostam Ghasemi said Wednesday without giving the reason. Ghasemi, quoted by semi-official news agency Mehr, warned that the fuel situation in winter would be “more difficult than in previous years”.

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Rostam Ghasemi
Ghasemi said the provision of liquid and natural gas fuels should relieve fuel supply in the industrial sector, however. Ghasemi also said Iran would shortly announce details of diesel fuel rationing it will implement.

“With stoppage of gas imports from this neighboring country, oil products distributing companies in different provinces should carry out necessary coordination for winter fuel supply with the provincial gas companies,”Ghasemi said.

Iran’s contract with Turkmenistan provides for the import of up to 45 mln m³/day.

Given Tehran’s commitment to Ankara for supply of around 28 mln m³/day of natural gas, it is not clear how Iran would maintain both domestic consumption and exports supplies. Turkmenistan’s gas was used in northern parts of Iran, where even in past years faced severe gas shortages occasionally.

The EU ban on importing Iranian gas risks alienating Turkey – the key state in the route of Brussels’ long-planned southern gas corridor, which will bring Caspian, Central Asian and Middle Eastern gas to Europe. The consequences would be for Turkey’s EU candidacy if it continues to import gas from Iran in contravention of the EU ban.

Legally speaking, Turkey has little room for manoevre. The take-or-pay contact between Turkish state gas importer Botas and The National Iranian Gas Exports Company (NIGEC) was drafted under international law and is legally binding for 25 years from 2001 when flow started, leaving Botas little option but to continue taking the 10 bln m³/year or face legal action.

At the same time, Turkish gas demand is expected to reach 48 bln m m³ this year, rising to around 50 bln m m³ in 2013 despite a slowing economy perilously close to the 51.8 bln m³/y maximum limit of the country’s current gas import portfolio. And that demand is set to grow further with liberalisation of the Turkish power market, which has seen private generation companies dash to construct cheap gas fired power plant to meet power demand growing at 8% a year. With Turkey already struggling to find enough new gas supplies to meet expected growth in demand, it simply isnt in a position to abandon 20% of its imports from Iran to fall in line with the EU ban.

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