Turkey, Iran set to clear hitches in gas deal
By Ercan Ersoy
ANKARA, Feb 11 (Reuters) - Turkish and Iranian officials will meet twice
this month to overcome last hurdles in a 23-year, $23 billion gas delivery
and pipeline deal, Turkish officials said on Friday.
"Our team will go to Tehran on Monday and later in the month a
delegation from the National Iranian Gas Company (NIGC) will come to Ankara
for talks," said Gokhan Yardim, general manager of Turkey's state
pipeline concern Botas.
"Work to sign the operational agreement, which defines issues related
to gas measurement and its border crossing, will begin this month and will
soon be finalised," he told Reuters.
Turkey and Iran agreed for the project in 1996 during an Islamist-led
government in Ankara. According to the project, a 1,300-km pipeline will
be built from Iran 's Tabriz to Turkey's capital Ankara.
The two sides have began building the pipeline on their soils, but global
financial crisis triggered in Russia in 1998 have delayed the financing
of the Turkish section.
"We found $450 million through international creditors in 1999,
which cleared the finance issue in the Turkish section," Yardim said.
Yardim said talks between Botas and NIGC in January resolved a dispute
in the 1996 agreement, which stipulates Turkey pay indemnity if it fails
to complete the gas pipeline by early 1999, according to a "take or
pay" clause in the agreement.
"We have not fulfilled our obligations because of matters that
were not in our hands," Yardim admitted.
"But we have shown the Iranians that they have not fulfilled their
pledge either to build the measurement station on their soil near the Turkish
border," Yardim said.
The two sides agreed in January that the take-or-pay condition should
take effect from July 30, 2001, when gas sales are scheduled to begin.
Supplies will rise to 10 billion cubic metres (bcm) a year in 2005 from
the initial three bcm.
Yardim said the operational agreement would soon be signed with Iran
"Without that document, we cannot proceed further."
The document will point out that Iran bears responsibility to build
the gas measurement station near the Turkish border where supplied gas
will be measured against quantity, pressure, quality and other parametres
before it is billed to Botas.
Turkey will have to build a compressor station on its soil near the
border, according to the gas agreement.
Botas has received bids from two companies, U.S. Solar and German MAN
AG, to build the compressor station.
But a Washington reservation, based on its 1996 Iran Libya Sanctions
Act (ILSA) that threatens to punish foreign firms investing more than $20
million a year in Iranian energy, delayed the Solar order, Turkish officials
Washington has repeatedly urged Turkey, which needs diverse energy sources
to help close its power deficits, to consider gas suppliers other than
Yardim played down the U.S. restriction and said Botas would soon select
the compressor supplier. Turkey says it needs Iranian gas to meet surging
demand from industrial, home and power plant consumers.
Its consumption is projected to hit 15.6 bcm this year - 10.5 bcm of
that from Russia, Turkey's chief supplier, 3.9 bcm from Algeria and 1.2
bcm from Nigeria in LNG form.
Turkey consumed 12.3 bcm in 1999, of which Russia sold 9.5 bcm and Algeria
the rest as LNG.