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Iran: Gas Exports To Turkey Now Due By Mid-August

A long-delayed gas deal between Iran and Turkey will get underway next month, according to Turkish energy officials. But the pledge may not end the uncertainty over how soon Iran's exports will begin.

Boston, 22 July 2001 (RFE/RL) -- Turkey has reportedly promised that natural gas imports from Iran will begin by mid-August after a series of statements suggesting longer delays.

The "Turkish Daily News" on 19 July quoted "senior energy bureaucrats" as saying that supplies from an Iranian gas pipeline would not flow on 31 July as scheduled, but would start in the middle of next month instead.

The latest date for the stalled 25-year gas deal is at odds with several statements made by Gokhan Yardim, general director of Turkey's state pipeline company Botas.

In May, Yardim said the deliveries would get underway in September or October. But on 8 July, the official Iranian news agency IRNA quoted him as saying, "Gas imports will most probably start in September of next year."

Given the record of inconsistency, the new pledge may not be the final word. In recent months, Turkish government officials have appeared to overrule Yardim several times following diplomatic contacts with Iran. Each time, Yardim has responded with new estimates and later dates, which may reflect Turkey's ability to meet its construction schedule.

The export deal, which has been valued at over $20 billion, has been a high priority for Iran. The country has lagged in gas development, although it is thought to possess the second-largest reserves in the world.

Tehran signed its gas accord with Turkey in 1996, but the deal has faced trouble ever since. In late 1999, Iran rushed to build a pipeline to the Turkish border and lit a flare on the frontier as a sign of readiness to pump gas according to its contract at the start of last year.

But Turkey failed to finish its part of the pipeline. After Iran threatened to impose $200 million in fines, the two countries agreed to extend the contract and start deliveries at the end of this month.

In the latest squabble, Yardim has blamed the added delays on Iran's failure to complete a metering station to measure the gas. At the same time, sections on the Turkish side remain incomplete.

Although the United States has opposed the Turkish contract with Iran, it is unclear that the policy has any bearing on recent events. The deal was specifically structured to skirt U.S. sanctions by making each country responsible for construction on its own territory.

Ankara's economic crisis since February and its long-running probe of corruption in the energy sector have been seen as two factors holding its progress back.

Turkey's ability to absorb large amounts of imported gas is open to question until its economy recovers or transit links to Europe through Greece are built. The country is also scheduled to accept more Russian gas early next year from the Blue Stream pipeline across the Black Sea.

The progress of Blue Stream has raised the chance that Iranian gas could be displaced before it even gets to the Turkish market. Azerbaijan also plans to pipe gas to Turkey. Azerbaijani officials reached an agreement with Georgia on transit tariffs last week, the Dow Jones news agency said.

Iran seems to have deliberately kept tensions lower than the last time the deliveries were delayed. Little notice has been given to the issue in the Iranian press.

But on 9 July, Turkey's Anatolia news agency quoted Iranian Oil Minister Bijan Namdar Zangeneh as saying, "If Botas does not meet its commitments under our agreement, then Ankara will have to pay us compensation."

Iran has repeatedly said that all its arrangements will be completed by the end of this month, but its progress in building the metering station remains unclear.

A brief delay until mid-August may not lead to any major reprisals. But if it proves to be a prelude to more postponements, Iran will have to decide whether to step up the pressure or back down.