Iran, it seems, was calling Turkmenistan’s bluff earlier this summer when Tehran said it no longer needs gas from its northern neighbor. Now a top official says Tehran will keep buying.
That is good news for Turkmenistan, which is so dependent on its main gas customer, China, that it is starting to look like a client state.
Iran is committed to increasing its own domestic gas production to up to a billion cubic meters per day by 2017, a target one industry analyst thinks is possible but unlikely within such a tight timeframe. But supplying Iran’s northern regions with domestic gas is complicated by its lack of infrastructure. So, since 1997, Iran has bought gas from Turkmenistan to service its north, and sold its own gas abroad.
Deputy Oil Minister Hamid Reza Araqi said this week that his boss and Turkmen President Gurbanguly Berdymukhamedov had met in Ashgabat this month to hammer out a new purchase agreement. According to regional news agency AKIpress, the meeting happened November 7.
“The deal makes it possible to raise the amount imported from Turkmenistan in cold months of the winter; starting in the beginning of the current year, Turkmenistan has exported 24-25 million cubic meters of natural gas to Iran [daily],” said Araqi, in comments carried in English by Iran’s Mehr news agency on November 19.
The agreement contains a provision to increase this to 30 million cubic meters daily, he added.
Turkmenistan has looked like a lonely supplier ever since Russian energy giant Gazprom announced plans last month to stop purchasing Central Asian gas. Gazprom’s announcement was a game-changer for Turkmenistan, which has long hoped to diversify through any of a number of stalled export pipeline projects, but which has instead increasingly relied on China as its main customer.
Iran, in turn, may have decided that it needs more time and money than it previously thought to build up a distribution system capable of supplying all corners of the country.
The Iran-Turkmenistan gas trade has been dispute-prone over the years. Iranian energy officials have complained on a number of occasions that Turkmenistan does not always deliver on the contractual terms it signs. So the deal may mean more on paper than in practice. But for the moment, it buys both a little time.