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Iran: Tehran Defers Gas Deal With Turkey

A ceremony to mark Iran's $20 billion natural gas deal with Turkey was put off on 30 July as work on the border fell behind schedule. Iran may now face a decision on whether to pursue a legal claim, risking the second energy dispute with a neighbor in the past two weeks.

Boston, 1 August 2001 (RFE/RL) -- Iran and Turkey have apparently missed their deadline for the start of their 25-year gas deal, opening the door to more wrangling over which country is to blame.

News media in both countries voiced confusion yesterday about the Iranian gas shipments to Turkey, which were due to begin the day before.

The "Turkish Daily News" called the events "a real puzzle," citing contradictory statements from the energy agencies of the two countries.

On Monday, Turkish Energy Minister Zeki Cakan issued a statement, saying that Iran's deliveries had not started because it still had not finished work at a border metering station. Officials of the Turkish state pipeline company Botas have been in Iran for the past week to inspect the facility ahead of the deadline.

Despite Turkey's statement, an official of the National Iranian Gas Company reportedly told Iranian radio on 30 July that the gas export to Turkey had started "in the presence of officials from Botas."

But on 31 July, the official Iranian news agency IRNA acknowledged that the "inauguration ceremony to start the gas flowing into Ankara was again postponed because of what the Turkish side claimed as 'technical snags' it found in the contract's implementation."

The Turkish newspaper "Cumhuriyet" reported that Iran had asked for an additional month to bring its work up to international standards. Turkey has insisted on its right to approve the border facility that will measure the gas under terms of the 1996 contract, which has been valued at over $20 billion.

The landmark export deal is the first for Iran, which has the world's second-largest reserves of gas. Tehran has been threatening to impose fines under a "take-or-pay" clause of the contract. But on 30 July, Cakan cited the unfinished work, saying, "That's why Turkey is not obliged to pay an indemnity to Iran."

The setback did not stop some Iranian newspapers from hailing the deal in commentaries that were apparently prepared in advance. The "Iran News" praised both the economic and political benefits of the exports, saying that they would "help enhance our image abroad."

The hard-line daily "Kayhan" applauded the "prudence shown by Turkish officials to remove hitches in energy cooperation." It then blamed the "snags" in the deal on "Ankara's unnatural relations with the illegal Zionist entity," referring to Israel.

The delay followed a week in which both sides gave assurances that the deal would start on time. Although Turkey negotiated a previous delay last year, Ankara declared last week that all the pipeline on its territory was ready for the Iranian gas.

Just days before that, Cakan had dismissed Gokhan Yardim as the head of Botas following his repeated calls for further delays. Most reports attributed the sacking to a corruption probe of the energy sector, focusing on payments for the competing Blue Stream project to pipe gas from Russia across the Black Sea.

As of 30 July, the "Turkish Daily News" reported that the only remaining problem for the Iranian deal was the size of the ceremony.

Iran was said to have wanted a full-scale presidential launching, which Turkey declined in favor of something low-key. The deal has been opposed by the United States.

But the postponement may now put a burden on Iran to devise a response. The government is likely to come under internal pressure to seek penalties against Turkey if the delay drags on.

At the same time, Iran may not need more friction with its neighbors after an incident last week in which an Iranian gunboat expelled two Azerbaijani survey ships from disputed waters in the Caspian Sea. On 30 July, Azerbaijan's ANS television broadcast an unverified report that an Iranian air force plane had crossed into Azerbaijani territory on 29 July for apparent reconnaissance.

While Iran may see the need to defend its rights in both cases, it also risks the possibility that events could spin out of control. An argument over penalties against Turkey could only succeed in stalling the gas deal further until the issue is resolved.

Iran's image abroad as an energy partner is also unlikely to improve if each week begins with another dispute.