Turkmenistan says it is ready to resume talks with Iran over a dispute on gas exports to its southern neighbor that were halted earlier this month as a result of a row on payments.
Turkmenistan’s Foreign Ministry in a statement announced that Ashgabat was ready to resolve the dispute over Tehran’s outstanding payments through talks, but also emphasized that it had the right to take the dispute to international arbitration.
The Ministry added that Iran's debt stemmed from the National Iranian Gas Company's failure to abide by the "take or pay" provision of the gas supply contract, Reuters reported.
At the heart of the dispute between the two countries is a claim by Turkmenistan that Iran owes it $1.8 billion from sales between 2007 and 2008 when freezing winters led to severe shortages across 20 Iranian provinces, forcing the country to raise gas imports from its northeastern neighbor.
At the time, Turkmenistan pounced on the occasion to demand a nine-fold hike which yanked the price up to $360 from $40 for every 1,000 cubic meters of gas.
According to Turkmen officials, the balance has built up to a debt of $1.8 billion which Iran is rejecting and has threatened to take the case to international arbitration.
An Iranian delegation was in Ashgabat for talks to resolve the issue on the last days of 2016 and there were reports that both sides had reached an agreement over the dispute. However, gas supplies were cut on Iran at the turn of the year leaving several northern provinces without gas.
Accordingly, officials in Tehran announced contingency measures to make up for the shortfall – measures that included switching fuel supplies to several power plants in the north to diesel.
No significant shortfalls in natural gas supplies to provinces such as Gilan, Mazandaran and Golestan have been reported so far.
Reuters in its report on Ashgabat’s inclination to talk to Iran over its gas dispute highlighted the possibility that Iran’s northern neighbor may have already come under financial pressures.
Turkmenistan faces a foreign currency shortage after Russia, once a major buyer of its gas, halted purchases last year, leaving China as its biggest customer, Reuters added.