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Turkmenistan, Iran Seek Outside Solution to Gas Dispute

Gas-rich Central Asian country reportedly falling deeper into debt to China as its economic woes show no sign of easing.

5 December 2017

Turkmenistan will take its dispute with Iran over gas payments to international arbitration.

 

President Gurbanguly Berdymukhamedov made the decision yesterday after a video conference with Myrat Archayev, head of state gas firm Turkmengas, the state news agency TDH reports.

 

The suggestion to seek arbitration came from Iran’s national gas company when the two sides were unable to reach a consensus, Archayev said.

 

Ashgabat claims it is owed about $1.8 billion for gas it delivered to Iran in 2007 and 2008, when freezing winters led to severe gas shortages, forcing Iran to import additional gas, Iranian PressTV reports.

 

This relatively minor dispute underlines the crucial role of gas exports in Turkmenistan’s economy, and the toll imposed on the country by falling energy prices and its reliance on only one energy customer, China.

 

The amount Turkmenistan is claiming equates to about 7 percent of the country’s annual budget. Officially, the state’s revenues and expenses next year should each come in at around 95 billion manats ($27 billion).

 

The expenses seem plausible, but the limited information available about state revenues suggests the government figure is optimistic, RFE/RL’s Qishloq Ovozi blog says.

 

Energy exports account for an estimated 70 percent of state revenues, although clarity is hard to come by as the details of Turkmenistan’s gas deal with China are not public. It is known that Ashgabat borrowed billions of dollars from Chinese entities to build the pipelines that carry its gas to China, and likely borrowed more to buy Chinese military equipment, Qishloq Ovozi says, and servicing those debts is probably depressing its real revenue figures.

 

Turkmenistan’s gas supplies to China next year could be worth some $6 billion, although it will probably receive less than that, the blog surmises.

 

For comparison, Ashgabat splashed out a reported $5 billion on facilities for the lavish Asian Indoor Games it hosted last fall.

 

 

  • Iran last year said it had paid off its debt to Turkmenistan and that experts should review the dispute, Reuters reports.

 

  • Iran has supplemented its own large gas production with Turkmen imports to supply northeastern areas that are poorly linked to its domestic pipeline network. Turkmenistan cut off gas shipments to Iran in January as the payment dispute widened.

Compiled by Ky Krauthamer

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