Iran and Turkey sign key Europe gas deal

Energy Trade

Iran and Turkey have signed a preliminary agreement to pump Iranian gas to Europe via Turkey, a move that will open a new export market for Iran's massive reserves.

Oil Minister Kazem Vaziri-Hamaneh said yesterday the memorandum of understanding (MoU) included an agreement to pump gas from Turkmenistan to Turkey via Iran and Tehran's approval for Ankara to develop three phases of Iran's South Pars gas field. Iran, with the world's biggest gas reserves after Russia, has been considering Ukraine and Turkey as possible routes to get its gas to Europe.
In August 2006, it announced plans for a joint scheme with Ankara to use its pipelines. Despite massive reserves, Iran has been slow to develop gas exports, partly because US sanctions on Tehran hinder access to technology for liquefied natural gas plants, which cool gas into liquid so it can be transported by ship. “This MoU will allow the transit of Iran's gas to Europe via Turkey and will let Turkmenistan's gas be exported to Europe through Iran's soil,” Vaziri-Hamaneh told IRNA news agency in Ankara.

Turkmenistan already exports gas to Iran and sent 4.1 billion cubic meters to the Islamic republic in the H1 of 2007. Iran The Central Asian country exports most of its gas via a Soviet-era pipeline to Russian firm Gazprom. An Iranian official in the delegation negotiating the deal with Turkey confirmed the report. “What we have done here is the basis for the joint works between us (Iran) and Turkey,” said National Iranian Oil Company international affairs director Hojatollah Ghanimifard.

The proposed $6.3 billion Nabucco pipeline project that will cross Turkey is backed by the EU partly as a means to diversify away from reliance on Russia by gaining access to Central Asian gas. The pipeline, running across Turkey to Hungary and Austria through the eastern Balkans, will eventually be able to carry 31 billion cubic meters a year of gas from producers in Central Asia to big consuming countries in Europe. Vaziri-Hamaneh said experts from the two neighbors will work on the project's details in one month to finalize the deal.

Ghanimifard said further talks would discuss issues such as the structure and shareholding of any firms to implement the plans. The minister said details on developing the phases 22, 23 and 24 of Iran's south Pars gas field by Turkey would be finalized in four to six months. “Details will be studied next month when Turkey's energy minister visits and in four to six month the necessary agreements will be signed,” Vaziri-Hamaneh said, adding that the phases would be developed under so-called “buy back” terms.
Iran has asked Japanese refiners to pay in yen currency for all crude oil purchases in an apparent attempt to reduce the country's US dollar holdings. (

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