Iranian gas market opening, if price is right

Turkey to purchase Iranian nat gas

Turkey may buy more Iranian natural gas (NYMEX:NGN14) if a price dispute can be settled, Prime Minister Recep Tayyip Erdogan said after talks with Hassan Rouhani, the first Iranian president to visit Turkey in 18 years.

Erdogan said he and Rouhani discussed gas pricing during a meeting in Ankara yesterday and asked energy ministers from the two countries to keep working on it. Turkey filed a complaint to the International Court of Arbitration in 2012 over the price of the gas it imports from Iran. Turkey is seeking a 25 percent discount on about 10 billion cubic meters of gas it purchases from Iran annually, the state-run Anadolu agency said today.

“We have decided to improve relations in gas, oil and electricity, even though there are some snags,” Rouhani said at a joint press conference in the Turkish capital late yesterday, describing the talks as a “turning point” in relations.

Rouhani is seeking to reconnect Iran with the world economy after a decade of isolation. Trade with neighboring Turkey plunged last year as a result of U.S.-led sanctions. The countries have also sparred over Syria, where they’re supporting different sides in the civil war. Rouhani told a business forum in Ankara today that Iran was determined to facilitate business for private companies.

Arbitration case

Turkey rejected withdrawing the arbitration case against Iran and found the Islamic republic’s proposal to resolve the dispute unsatisfactory, Energy Minister Taner Yildiz said today. Talks will continue on reducing price of gas from Iran next week.

“Iran wants to know the amount of possible increase in gas purchase and we want to know on what price such an increase will be based on,” Yildiz said. “Gas bought from Iran is the most the expensive among Turkish imports and we maintain hope for a discount because it is unsustainable.”

Rouhani was accompanied on his trip to Turkey by more than 100 businessmen, seven ministers and central bank Governor Valiollah Seif, according to his Twitter account. The countries agreed to link their railway networks and improve cooperation in banking, Rouhani told an earlier news conference with Turkish President Abdullah Gul.

A regional rival to Iran, Turkey is also “a very important potential partner that could help Rouhani” as he seeks to ease Iran’s isolation, said Ozgur Unluhisarcikli, director of the German Marshall Fund of the United States in Ankara, in an email on June 6.

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