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LIVE

Sunday, 20 July, 2008, 22:20 GMT | more prices >>

Nozari hits out in Turkmen gas row

By Upstream staff

Iran will stop buying Turkmen gas if its neighbour does not resume supplies cut off two weeks ago, Iranian Oil Minister Gholamhossein Nozari was quoted as saying today.

Turkmenistan said it had a technical problem and Iran's failure to pay for gas received was delaying pipeine repairs.

Turkmenistan halted daily deliveries of up to 23 million cubic metres to Iran late last month. Although it blamed technical issues, Iranian officials said Ashgabat also seeks a higher price for the natural gas it sends to its neighbour.

"Turkmenistan must first start supplying gas and then come to discuss (the price)," Reuters quoted Nozari as telling Iran's Fars News Agency. "Otherwise we will announce that we don't need Turkmen gas."

He was speaking after a state TV station and Iranian MP said Turkmenistan wanted to double the price for the gas it sells to Iran, which has the world's second biggest gas reserves.

Turkmenistan's Foreign Ministry repeated in a statement issued today that supplies were disrupted due to technical problems on the pipeline and said repairs were delayed due to lack of cash.

"It should be noted that a failure by the Iranian side to meet its obligations concerning payments for already received gas from Turkmenistan does not allow to complete repairs on time," the Turkmen statement said.

Iran, a small gas importer despite its huge reserves, gets about 5% of its needs from Turkmenistan and the supply disruption caused shortages in some northern areas as well as a reduction in Iran's own gas exports to Turkey.

The disruption is particularly sensitive now because of some of the coldest winter temperatures for decades in Iran.

Iran's Foreign Ministry said today it was in talks with Turkmenistan but was discussing technical not price issues.

However, Reuters reported that the English-language Press TV said in a report on its website that Iran, in principle, agreed to a price rise.

"Turkmenistan proposes that the gas price should be increased to $140 per 1000 cubic metres. Iran agrees with the price rise on condition that the Turkmen side agrees to increase the volume of its gas exports to Iran," it reported.

The original gas contract ran to 2024, it said.

"Iran and Turkmenistan signed an agreement last year to increase the volume of gas exports from eight to 14 billion cubic metres (per year) at a price of $75 per Mcm but Turkmenistan has called for annulment of the agreement," Press TV said, without citing a source for its report.

Turkmenistan reached an agreement in November to increase the price of gas it delivers to Russia's gas export monopoly Gazprom, to $130 per Mcm in the first half of 2008 and $150 per Mcm in the second half, up from $100 per Mcm.

The head of the Iranian parliament's energy commission also said Turkmenistan wanted to double the price. He said Tehran might complain to international bodies, without elaborating.

"The correct solution is to increase the price but not to the level they want," Kamal Daneshyar told Reuters.