National Gas Company: We Will Refer the Gas Cut Case to International Arbitration

The National Gas Company of Iran stated in a statement on Wednesday, emphasizing the 'lack of response' to its request for negotiations with the Turkmen side, that 'Iran has put the process of referring disputes to international arbitration on its agenda.' The statement published on the official website of the National Gas Company of Iran clarified that the company 'has paid its current claims and part of its previous debt to Turkmen Gas, which has exceeded 5.4 billion dollars, through various means over the years.' It noted that the debt of the National Gas Company to Turkmen Gas is related to the sanctions period when 'although direct payment was not possible due to international sanctions.' The statement mentioned that part of the 'significant amounts' of that contract 'was paid with the agreement of both parties in the form of exporting goods and services to Turkmen Gas, and also hundreds of millions of dollars in guarantees were issued for exporters of goods and services by the National Gas Company.' The National Gas Company of Iran also referred to 'numerous violations by Turkmen Gas of the contract terms, including the quality and quantity of gas delivered,' which, according to this statement, makes Turkmen Gas 'subject to the penalties specified in the contract.' The statement indicated that the Iranian side 'has seriously requested negotiations and decision-making in these matters,' but 'has remained unanswered in practice.' The statement further emphasized that 'the legal and financial dispute resolution mechanisms between this company and Turkmen Gas were anticipated in the contract,' asserting that 'both parties must exclusively act through the designated path in that contract to resolve their disputes.' Therefore, the National Gas Company of Iran 'has put the process of referring disputes to international arbitration on its agenda.' Two days prior, the National Gas Company confirmed that Turkmenistan had halted gas exports to Iran due to what was declared a dispute over gas debts. According to a contract signed 20 years ago between the National Gas Company of Iran and Turkmen Gas, part of the gas consumed in the northern regions is supplied through imports from this country. Last year, Iran received about 9 billion cubic meters of gas from Turkmenistan, which was double the amount received from its northern neighbor in 1993. Previously, in the winter of 2007, the Turkmen side had similarly cut gas exports to Iran, demanding an increase in the contract amount, which the government of Mahmoud Ahmadinejad agreed to with a ninefold increase in gas prices. In this context, Gholamreza Ansari, former Iranian ambassador to Turkmenistan and current member of the Tehran City Council, accused Ahmadinejad's government of failing to negotiate with the Turkmen side in an article in the electronic newspaper 'Omid Iranians.' Gholamreza Ansari, who was Iran's ambassador in Ashgabat during Mohammad Khatami's presidency, stated that Turkmenistan had only agreed to add ten dollars to the gas price, and Iran had set a condition that 50% of the payment be made in the form of technical services and goods, which Turkmenistan ultimately accepted at 30%. The former ambassador added that Ahmadinejad's government halted these negotiations. He referred to Ahmadinejad's first visit to Turkmenistan and his 'sudden behaviors' in the past, stating, 'In this contract as well, without regard to all previous agreements and extensive expert negotiations between the two countries, Mr. Ahmadinejad, without prior coordination, randomly and without any expert review, revised the contract price.' In 2007, media quoted Mahmoud Ahmadinejad as saying, 'Some people inside have asked Turkmenistan to cut off gas so that a group can exploit it politically.' Turkmenistan claims that Iran owes nearly two billion dollars for gas imports during 2007 and 2008, but Tehran has rejected this claim. However, the National Gas Company of Iran in its recent statement published on Wednesday emphasized that 'according to the explicit provisions of the contract, Turkmen Gas is not permitted to cut off the gas flow even in the event of debt or delay in payment, and such action is a clear violation of the contract and indicates that Turkmen Gas is not a reliable partner in international transactions.' The recent cut in gas imports to Iran by Turkmenistan has elicited reactions from officials of both countries, including Bahram Qasemi, spokesperson for the Iranian Foreign Ministry, who stated that he does not consider the cut of gas from Turkmenistan to Iran to be political. The recent statement from the National Gas Company of Iran also emphasized that 'the financial and legal disputes raised are solely between Turkmen Gas and the National Gas Company of Iran' and called on Turkmen political officials to 'allow the parties to negotiate and resolve their disputes within the framework of the contract and commercial principles.' In the past two days, several Iranian officials have also urged the Iranian people to conserve and manage gas consumption to ensure that residents of northern provinces, especially those in Golestan and Mazandaran, do not face shortages or gas cuts.