Berdymukhamedov met with Rouhani; «Iran's debt» unchanged

The conflict between Ashgabat and Tehran has been growing. The parties cannot come to agreement on how Iran will be paying its debt for the supplied Turkmen natural gas, this is accompanied by controversial issues of the Caspian Sea. Delaying the problem could lead to a breakdown in signing the Caspian Sea status agreement at the Caspian summit to be held this spring in Astana. For the second day running, Iran’s oil minister Bijan Zangeneh is staying in Ashgabat to settle these issues. A few days ago, Iranian President Hassan Rouhani carried out a short informal visit.

The arrival of the Iranian leader was kept secret. There is no official information on the visit. It is only known that the Iranian president was supposed to arrive in Ashgabat on March 15. Those days the head of Turkmenistan Gurbanguly Berdymukhamedov was visiting the Middle East — Kuwait and the United Arab Emirates. However, two independent sources told EADaily that Hassan Rouhani’s visit did take place — the heads of the two states were limited to communicating inside the Ashgabat airport.

Igor Pankratenko, political scientist, member of the «Iran-East» (Iran) Central Asian and Afghan Studies Institute’s Scientific Council, believes that this means the parties have not agreed on disputable issues. Ashgabat insists on Iran paying the debt for gas supplies. Tehran, in turn, insists that there is no debt, and even if there is any, then it is extremely low, and if the recount confirms it, the Iranian side would pay off according to the barter scheme — with consumer goods. Ashgabat does not like this option.

The bulk of the debt for the supplied Turkmen gas was formed in winter 2007−2008. Because of the cold weather, Iran was forced to increase the volume of Turkmen gas imports. Taking advantage of the situation, Ashgabat raised the quote from the current $ 40 per 1,000 cubic meters to $ 360. Thus, according to the Turkmen side, Iran was due to pay about $ 2 billion. Iran offered to recalculate the received additional volumes of gas at the former price, but Ashgabat refused, and in January 2017, in violation of the 25-year agreement, unilaterally cut off gas supplies to Iran. Now, Turkmenistan intends to resolve the issue in an international arbitration court.

Refusing to recognize the debt, the Iranian side comes up with various excuses. The other day the National Iran Gas Co. (NIGC) state corporation said that Ashgabat was supplying substandard gas for a while. Then a statement was made that the money was transferred to Turkmenistan, but they did not reach the addressee, since Iran was under sanctions, and the money, obviously, was lost. Tehran is also dissatisfied with the fact that Ashgabat is increasing its exports of gas to China. In particular, the construction of the fourth branch of the Turkmenistan-China gas pipeline leads to wariness, since, as it seems to the Iranian side, this could deprive it of the opportunity to import Turkmen gas in the future when the contradictions with Ashgabat are leveled.

Tehran is also nervous of the Turkmenistan-Afghanistan-Pakistan-India gas pipeline project (TAPI) keeping in the mind its own gas supplies from the South Pars field to Pakistan and India. The laying of the MIR gas pipeline on the Iranian territory is completed, but the construction of the Pakistani site is frozen for safety reasons. Plus, the already traditional discontent of Tehran on the Caspian Sea status — Iranian proposals on the principles of the largest reservoir dividing never pass, but still it is impossible to derail agreements between other Caspian countries. A single thing remains, that is to reap the maximum benefit from what is going on.

According to Pankratenko, in the Caspian «the situation is quite curious.» Separate consultations between the Caspian countries are under way. There are interesting projects; there are international investors who are waiting for the coordination of the Caspian status. Everyone is trying to agree to get anything, as the projects are in a rush. Especially Azerbaijan and Turkmenistan are in a hurry as being «pushed» by Turkey, which sees itself as the largest gas hub.

«Tehran tried to agree on the delimitation of the Caspian Sea with Azerbaijan first. Then Ashgabat made the same call. But due to debt problems the dialogue did not work out. I do not exclude that during the forthcoming summit agreements on the Caspian Sea status will not be signed again. Everything will be limited to intent protocols. At best, temporary protocols will be signed on the bioresources sector and others. But no one will see any general outcome document — they have been waiting for it for 25 years, and still will be waiting,» said Igor Pankratenko.

Now it is unknown if Iranian Minister Zangeneh manages to come to an agreement with the Minister of Foreign Affairs of Turkmenistan Rashid Meredov. According to the official information, the parties warmly congratulated each other on the Nowruz holiday and exchanged views on the current state and prospects for expanding bilateral trade, economic and energy cooperation. Zangeneh and Meredov expressed the need to actively cooperate in the energy sector in the future, talked about the Turkmen-Iranian business forum that will be held in Ashgabat in the coming days, which «will promote activation of contacts between state and private structures of the two neighboring states.» Not a word about the gas confrontation.

Assessing the situation, Ilgar Velizade, the head of the «South Caucasus» Club of Political Experts, told EADaily: «The agreements on the Caspian Sea, confirmed last December by Russian Foreign Minister Sergey Lavrov, remain. The arrangements have been adopted in a five-sided format. Holding meetings in a five-sided format provides for the approval of these decisions by all parties. The Turkmen and Iranian sides agreed with the provisions that were discussed on the Caspian status. This is beneficial for Turkmenistan and Iran. Having solved the problems with the Caspian Sea, the parties can start implementing their projects. Turkmenistan hopes to deliver its gas in a western direction, and the unresolved legal issues on the Caspian are hampering this. There are difficulties between Baku and Ashgabat over the Serdar/Kapaz gas field in the Caspian Sea. The dispute has not been settled, but Baku managed to withdraw this dispute even beyond the framework of bilateral relations. It is as if by itself. And Ashgabat was once going to appeal to international arbitration to resolve the dispute.»

According to Velizade, much will be decided depending on how Turkmenistan can settle problems with other Caspian countries. And in this light, the decision of the Turkmen-Iranian dispute is important for the entire Caspian region.

EADaily's Central Asian Bureau