Iran is discussing possible discounts in its sales of natural gas to Turkey after a court of arbitration ruled in Ankara’s favor in a dispute over pricing, Minister of Petroleum Bijan Zangeneh says.
Turkey receives about 10 billion cubic meters of gas from Iran a year under a 25-year deal signed in 1996 but Ankara has taken Tehran to international arbitration over the pricing which it deems too expensive.
While Ankara’s first attempt was quashed by the International Chamber of Commerce in Switzerland in 2014, Zangeneh said on Tuesday night that the second ruling had been issued in Turkey’s favor, obliging Iran to a 13% discount.
“Negotiations with the Turkish side on mechanisms of cutting the price of Iran’s exported gas by 13% are underway in order to reach an understanding on the delivery of gas and a time-frame,” Zangeneh told the state television.
“There are discussions on how we will repay the discount which should have been implemented for the period before,” he said, indicating that the sum totaled $2 billion.
The minister said Turkey was demanding that the price be cut by 25% but the arbitration had agreed to half of that.
Turkey’s state-owned Petroleum Pipeline Corporation (BOTAS) took the case to the court of arbitration in 2012. Iran is Turkey’s second supplier of gas after Russia, providing for one-fifth of the country’s consumption.
The gas exports are carried out via a 2,577 km (1,601 miles) pipeline running from Tabriz to Ankara.