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Iran: Doubts Continue Over Gas Deal With Turkey

Iran and Turkey disagreed this week on the reason for the delay in their $20 billion gas deal, which was supposed to start on 30 July. The latest dispute raises doubts about whether the pipeline between the two countries will open in September, as announced. Our correspondent Michael Lelyveld reports.

Boston, 8 August 2001 (RFE/RL) -- Doubts continue this week for Iran's 25-year gas deal with Turkey after the two countries blamed each other for failing to start deliveries last month.

A week ago, both sides seemed to agree that Iran needed another month to overcome "technical problems" at the border before it could begin pumping gas through a metering station at the town of Bazargan.

Following a series of earlier setbacks in the $20 billion deal, Iran and Turkey had set 30 July as the date that gas would flow through new pipelines from Tabriz to Ankara.

But in an interview on 4 August with "Iran Daily," Iranian Oil Minister Bijan Namdar-Zanganeh said of his Turkish counterparts: "That's their problem. They are, apparently, unable to overcome technical difficulties, but are blaming us for the delay."

Turkey's version of events is that the metering station, which is to measure the gas, must be certified by Turkish experts under the terms of the 1996 sales contract with Iran. So far, the two sides seem to be communicating through the press.

On 6 August, Turkish Energy Minister Zeki Cakan told a press conference: "When the certificate is signed, the natural gas will be bought. We don't have any problems regarding the natural gas to be bought from Iran. We have completed all of our obligations," the "Turkish Daily News" reported.

Zangeneh said the metering station has been completed "in accordance with international standards," raising questions about why Turkey is withholding its approval.

The standoff may lead to a whole host of problems.

Zangeneh has been under fire for months from conservative critics who accuse his ministry of allowing corruption in deals with foreign oil companies. Tensions over oil interests are also high because of the 23 July encounter between an Iranian gunboat and Azerbaijani survey ships on the Caspian Sea.

The "Iran Daily" asked Zangeneh a series of uncomfortable questions about whether Turkey would try to cancel the gas deal and whether it was responding to pressure from Israel. Zangeneh's answer was no, on both counts. But pressure on the minister seems to be rising in the days before President Mohammed Khatami announces his cabinet choices for his second term.

Iran's press has yet to focus on Russia's success in the Turkish market this week at a time when Iran's first big gas export deal seems to be stalled.

From 4-6 August in Istanbul, top Russian government officials celebrated the passage of a mammoth pipe-laying ship through the Turkish Straits to the Black Sea. The transit marked yet another start to the Blue Stream project to pipe gas from Russia, starting in March 2002.

Russian Deputy Prime Minister Victor Khristenko said on 6 August that with the project to ensure the energy security of the region, "a new geography will emerge," Interfax reported. Whether that geography will include Iran remains to be seen.

Although it received less attention, Turkey asked Russia's Gazprom to increase its daily gas deliveries by 15 percent over the contract amount for this year, Interfax reported on 6 August. The new supplies through Bulgaria may be a sign that Ankara does not expect to get Iranian gas anytime soon.

Even the most optimistic figures from the Turkish pipeline company Botas show that the country's gas supplies will exceed demand until 2003, if the Iranian imports are figured in.

Perhaps in fairness to Zangeneh, "Iran Daily" published an account of the 30-year history of plans for the gas deal with Turkey, listing some of the troubles that have arisen along the way. Among these was the outbreak of the Iran-Iraq War, which froze "Iran's efforts to consolidate ties with neighboring and Muslim countries," the paper said.

The difference with the 1996 contract is that it includes a "take-or-pay" clause, which could expose Turkey to millions of dollars in damages if it refuses Iranian gas. It is unclear whether the certification issue can be used as a legal loophole for long.

So far, Iran has been relatively restrained on the issue of fines, perhaps because it wants to avoid an atmosphere of conflict on several fronts at once.

Zangeneh argued that Turkey has already spent $1.4 billion on the gas plan and is unlikely to walk away from an investment that large.

That reasoning seems sound, but events of the past week make it impossible to tell.