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Transmission

After Standoff, Iran, Turkmenistan Make Gas Deal

The gas trade has been a sordid affair for Turkmenistan and Iran. In early November, Turkmenistan stopped gas flows to Iran -- its third-biggest export market -- over either payment issues on the Iranian side or pipeline maintenance, depending on who you believe. 

The most recent shutoff -- which lasted two days -- was the third in the last four years, and the second in 2012. As Myles Smith noted for EurasiaNet in November, Turkmenistan has never been shy about disrupting flows on short notice, but gas relations with Iran have never been overly dramatic. In 2010, the two countries opened a new 30-kilometer pipeline with the aim of doubling Iranian purchases of Turkmen gas from 10 billion to 20 billion cubic meters of gas annually. 

Whatever the cause of the November dispute, the two countries have apparently struck a deal on a payment plan. According to "Mehr" and "Fars" -- both semiofficial media outlets in Iran -- Tehran and Ashgabat struck a barter deal over roughly $1 billion in outstanding payments, and have agreed to raise the daily delivery of gas. 

According to the Energy Information Agency (EIA) at the U.S. Department of Energy, Turkmenistan has sold gas to Iran since 1997. Iran actually has the world's second-largest gas reserves, but because of what the EIA calls "the poor investment climate and international political pressure" in the country, it has been unable to exploit its massive gas resources located offshore in the Caspian Sea and Persian Gulf. Iran thus relies on gas from Turkmenistan to meet residential demand in the northern part of the country. 

Due to international sanctions on its energy and financial sectors, Iran sometimes has trouble making international payments for resources. According to Press TV -- which is seen as a mouthpiece for the Iranian government -- the deal with Turkmenistan involves "equipment needed for the Turkmen oil and gas industry.” It's an interesting deal, as Iran's own oil and gas infrastructure is, by most accounts, lacking. 

The feather in Iran's energy cap, the South Pars gas field in the Persian Gulf, is estimated to be the world's largest deposit of the stuff. Iran splits the claim with Qatar, but has seen the departure of energy giant Shell (in 2008) and the Chinese government's natural-gas company CNPC (in 2012). What had already been a slowly developing project has been further slowed. According to the Iranian firm running the 29-phase project, 400 Iranian firms will work to develop the field, which Iranian officials claim will more than double the country's gas supply -- if full capacity is ever realized.

Iran's infrastructure woes come at a convenient time for Turkmenistan. Since 2009, when a pipeline explosion led to a flare-up between Turkmenistan and the Russian energy giant Gazprom, Ashgabat has sought to expand its export base -- opening the second pipeline with Iran, and one with China that came with a 35-year supply agreement. 

A new payment arrangement and a production slowdown in the gulf are probably welcome news in Turkmenistan.   

-- Zach Peterson
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Comment Sorting
Comments
     
by: A from: World
December 19, 2012 20:10
When you say Iran shares the South Pars with the UAE (the CORRECT answer is Qatar), it discredits your knowledge of the rest of your article
In Response

by: RFE/RL Editors
December 19, 2012 20:25
Thank you for pointing out the error. It is, of course, Qatar.
In Response

by: DEV from: INDIA
December 28, 2012 10:20
It may also be biased which we normally see in western reporting on anything on Iran. It is really a SHIA SUNNI war with west taking the spoils of the dispute. They have blocked Indo- Iranian gas deal and also will block Pakistan - Iranian gas deals.

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Written by RFE/RL editors and correspondents, Transmission serves up news, comment, and the odd silly dictator story. While our primary concern is with foreign policy, Transmission is also a place for the ideas -- some serious, some irreverent -- that bubble up from our bureaus. The name recognizes RFE/RL's role as a surrogate broadcaster to places without free media. You can write us at transmission+rferl.org

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