Iranian President Hassan Rouhani (L) addresses a Turkish-Iranian business forum in Ankara on June 10, 2014
Iranian President Hassan Rouhani (L) addresses a Turkish-Iranian business forum in Ankara on June 10, 2014 © Adem Altan - AFP
Iranian President Hassan Rouhani (L) addresses a Turkish-Iranian business forum in Ankara on June 10, 2014
Fulya Ozerkan
Last updated: June 10, 2014

Turkey and Iran fail to reach gas price deal

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Ankara and Tehran have failed to reach a deal on the pricing of Iranian gas imports to Turkey but will meet again for further talks, officials said Tuesday.

Turkey is one of the largest customers for Iranian oil and a major buyer of its natural gas, with about a fifth of its gas supplies coming from Iran.

Ankara is seeking a discount on gas prices, arguing that they are unsustainable.

"Turkey purchases the most expensive natural gas from Iran among other suppliers," Energy Minister Taner Yildiz told reporters on the sidelines of a business forum in Ankara attended by Iranian President Hassan Rouhani.

"We believe Iran will go for a discount on the price of the gas because we told them that this is not sustainable," he said.

Turkish and Iranian ministers held extensive talks late Monday on the issue but officials said Tehran has so far refused to slash its prices.

Yildiz said an Iranian delegation would visit Turkey next week for further discussions.

"The talks will continue to hammer out a formula on the pricing," said a spokesman for the Iranian embassy in Ankara.

"I believe the two sides will find a common ground but I don't know when," he told AFP.

Energy imports are one of the major reasons for Turkey's high current account deficit -- a weak point which leaves the country's economy vulnerable to global financial turbulence.

Turkey's state-owned pipeline company BOTAS lodged a complaint against Iran at an international court in Switzerland in 2012, arguing that the price paid to Iran for gas imports was too high.

Yildiz said Tuesday he hoped that the case would be concluded by the end of this year.

Turkish officials say Iran has called Turkey to drop the arbitration case at the Swiss court in return for talks on the price of the natural gas but Ankara has insisted on having the pricing negotiations proceed independent from the court process.

On Monday, Prime Minister Recep Tayyip Erdogan said Turkey was ready to increase gas shipments from Iran once the dispute was settled.

The two countries are keen on boosting their trade from around $14.5 billion in 2013 to $30 billion in 2015.

"Political risks are diminishing in Iran, which offers a unique opportunity for investors," Rouhani told the business forum in Ankara.

Despite their differences on some regional political conflicts including Syria's civil war, Iran and Turkey are taking steps to mend fences since Rouhani's election last year which has seen Tehran open the door for dialogue with the West and renew talks with world powers on its contentious nuclear programme.

Turkey, which is bound by UN sanctions against its eastern neighbour, is a fierce opponent of Western measures that have severely curtailed its access to Iranian fuel in recent years.

It hopes Tehran will forge a diplomatic deal with the West over its nuclear programme by the deadline of July 20.

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