Oil & Gas

30 Nov 2021

Iran Signs Gas Swap Deal with Turkmenistan, Azerbaijan

30 Nov 2021  by   

Iran has signed a tripartite agreement with neighbours Azerbaijan and Turkmenistan to facilitate the movement of gas between the two countries.

Under the deal, Iran will receive 1.5bn-2bn m³/yr of gas from Turkmenistan at the Sarakhs border crossing in the northeastern Khorasan Razavi region and deliver an equivalent volume to Azerbaijan at the Astara crossing in Gilan province in the northwest. The agreement will be "operational from the beginning of winter", Iranian oil minister Javad Owji said.

The deal was signed in the Turkmen capital of Ashgabat on the sidelines of the 15th summit of the Economic Co-operation Organisation — a political and economic inter-governmental body that was founded in 1985 and which brings together 10 western, central and southern Asian countries.

Owji, who travelled to the summit as part the Iranian delegation, said Tehran has also made progress towards settling a payment dispute with Turkmenistan that led to pipeline deliveries of Turkmen gas to northern Iran being cut off in January 2017. "Fortunately, with the good solutions of the ministry of oil and [state-owned] NIGC, the first installment of our debt settlement will be paid to Turkmenistan soon," Owji said.

Iran had been importing 5bn-7bn m³/yr of Turkmen gas by pipeline — along the 8bn m³/yr Korpedzhe-Kurt-Kuri and the 6bn m³/yr Dauletabad-Sarakhs-Khangiran routes — under a 25-year supply contract signed in 1997. But state-owned Turkmengaz slowed shipments in 2016 and stopped them completely in early 2017 over Iran's reluctance to meet its contractual take-or-pay commitments and settle what the Turkmen foreign ministry described as "significant debts" for previous gas supplies.

Iran acknowledged at the time that it did have outstanding debts to Turkmenistan, but said it was unable to settle them due to UN sanctions that were in force until the implementation of the 2015 nuclear deal with world powers in January 2016.

Iran had been importing gas from Turkmenistan to meet demand in the north of the country, which is far removed from most of its own gas fields and reservoirs in the south. But the commissioning of a new internal pipeline between Damghan in northern Iran and Neka on Iran's Caspian Sea coast in August 2017 dramatically reduced Tehran's dependence on imported gas from its northern neighbour.


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