Competition from Azerbaijan underpins Turkey-Iran gas agreement
Efforts by Azerbaijan to sell gas to Turkey now appear to have been behind Iran’s decision to sign a gas supply agreement with Turkey, reports the Iran Daily newspaper. According to the agreement, which was signed in Ankara, Turkey will begin purchasing gas delivered by pipeline from July 30, 2001.
Gokhan Yardim, head of Turkey’s Botas Pipeline Company, and Hamdullah Mohammad-Nejad, Iranian Deputy Oil Minister and head chairman of the National Iranian Gas Company, signed the deal.
The agreement is little more than a formality. All the significant terms, including a three-year extension of a 22-month contract, were already negotiated this past February after Iran threatened Turkey with a $120-million penalty for delaying its purchase of gas. The dispute erupted in January, when Iran hurried to finalize a pipeline to the Turkish border, and lit a ceremonial flame at the town of Bazargan in recognition that its gas exports were available. Turkey was apparently surprised, since it had moved slowly on constructing its portion of the 1,500-km pipeline on Turkish territory. Iran claimed that it was entitled to the $120 million fine or the $200 million cost for its share of the pipeline. But, according to the recent agreement, Iran will drop its claims for penalties as long as Turkey meets its deadlines for gas deliveries next year.
Turkey’s delay was compounded by its inability to obtain a vital compressor from the U.S.-based Solar Company. Washington is vehemently opposed to the Iran gas deal, valued at more than $20 billion. The compressor will instead be purchased from Germany’s M.A.N.
Azerbaijan’s independent plans for a gas pipeline to Iran appear to be the true motivation behind the recent protocol. At the end of July, the head of the Georgian International Gas Corporation proclaimed that construction of a gas pipeline from Azerbaijan to Turkey would begin before the end of the year. The scheme is part of a $1.5 billion investment to link Turkey to Azerbaijan’s massive offshore Shah Deniz gas field. British Petroleum plans to commence deliveries in winter 2002, assuming a deal with Turkey is reached.
Iran is also concerned competition from Russia’s Blue Stream project to transport gas across the Black Sea to Turkey, as competition from Turkmenistan, an emerging supplier. The emergence of new gas fields in Azerbaijan’s Caspian region may become an even greater threat because of the close ethnic and political ties between Ankara and Baku. – (Albawaba-MEBG)