Iranian gas prices are irrational, body says

ISTANBUL

A gas power plant is seen above. Expensive gas prices hike electricity costs.

Turkey is buying Iranian fuel at irrational prices, according to a local industry head, as Turkey’s oil imports from Iran fall to a two-and-a-half year low, according to official figures.

The Iranian natural gas price is beyond any reasonable level, according to Natural Gas Importers and Exporters Association (DİVİD) Chairman Fatih Baltacı. “I think Turkey should purchase Iranian gas at a 30 percent discount. We do not have any chance to cancel out gas contracts [signed with Iran], but a [favorable] decision may be obtained at an arbitration court,” he told Anatolia news agency yesterday.
He added that the reason why Iranian gas was currently too expensive was the contracts signed before, when the global oil market had a different structure. “Such contracts feature the right to bargain [future] prices,” he said.

It is not commercially wise for Iran - which due to sanctions cannot sell the gas to anywhere other than Turkey - to insist on high prices, according to Baltacı.

“The arbitration case should be overseen in Switzerland. Turkey would be in a strong position in this case, because it won an arbitration case in Switzerland before,” he said, adding that the global situation and the political agenda were also not on Iran’s side.

Oil imports plummet

Turkey’s imports of Iranian crude plummeted in July to their lowest in two-and-a-half years, official trade data showed, as Western sanctions against the Islamic Republic widened, Reuters reported yesterday.

Turkey imported just over 48,000 barrels per day (bpd) of Iranian crude in July, the lowest since December 2009, the data showed.

That was down sharply from June, when it imported 167,000 bpd, and a fraction of Turkey’s 2011 average of 180,000 bpd.