Turkey filed a lawsuit against Iran in the Hague International Court over gas prices last year. Hamid Reza Araghi, NIOC directing manager, had told before that Turkey brought the case to the Hague over higher gas price, which they believed as unfair, and over suspicions raised about the fact that Iran would not guarantee gas supply to the country.
Iranian and Turkish officials of BOTAŞ Petroleum Pipeline Corporation (BOTAS) had held several meetings. Bijan Namdar Zanganeh, Iran’s oil minister met with Turkish energy minister Taner Yıldız during Rouhani’s visit to the country last autumn, where they discussed Turkey’s proposal to increase gas supply and decrease prices. After so many months of talks, the proposal brought no settlement to the differences, and finally Iran and Turkey brought the case to international arbitration in the Hague, where both Iran and Turkey, as strategic regional partners, provided the court with their evidence.
Zanganeh told reporters early August in the sidelines of an economic forum that the ministry had not reached a settlement with Turkey; however, he added that Iran handled the case skillfully in the international court.
Taner Yıldız had said before that Iran opposed the proposal that gas prices be decreased. “Turkey now waits for arbitration by international tribunal in the Hague on Iran’s gas price,” he was quoted by the press to have said early August.
He added also that Turkey had not received a tangible proposal from Iran about gas supply to Turkey in lower prices.
Market analysts believe that difference between suppliers and buyers of gas is all but natural, especially in long-term agreements (2-30 years). According to an article in Iran and Turkish gas agreement, known as ‘Take or Pay,’ if Turkey refuses to receive up to 10 billion cubic meters of gas annually for technical reasons, it should pay completely for the total volume; similarly, the NIOC should supply Turkey’s BOTAS 10 billion cubic meters of gas annually. Any party refusing to carry out the commitments should reimburse the damages incurred upon the other party.
In 2009, BOTAS faced a $600m fine for getting less than enough volume of gas (6.8 instead of 10 billion cubic meters); so Turkish company officials demanded that the article be removed from the agreement in the negotiations, which oil ministry officials refused to accept.
Ali Majedi, deputy-minister for international and commercial affairs said the article would not be removed; rather, some changes would be made to the percentage conditioned by the article.
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