A bitter dispute between Iran and Turkmenistan over gas prices risks the cancellation of a major deal, which could see the Central Asian nation lose its biggest customer.
Turkmenistan has threatened to stop the gas flow across the border if Iran does not settle a debt which it claims remains outstanding from previous imports.
Ashgabat claims Iran owes it $1.8 billion from sales between 2007 and 2008 when freezing winters led to severe shortages across 20 Iranian provinces, forcing the country to raise gas imports from its northeastern neighbor.
At the time, Turkmenistan pounced on the occasion to demand a nine-fold hike which yanked the price up to $360 from $40 for every 1,000 cubic meters of gas.
According to Turkmen officials, the balance has built up to a debt of $1.8 billion which Iran is rejecting and has threatened to take the case to international arbitration.
Iran holds the world’s biggest gas reserves but they are mostly located in the country’s south, making the country reliant on its neighbors for supplies in the northern provinces.
A recent drop in temperatures across Iran has prompted Turkmen authorities to threaten a halt to the gas flow unless the Islamic Republic clears the alleged debt.
Iranian media say the country can weather a full stop to the gas flow from Turkmenistan by completing pipe laying in the country’s north and temporary diverting of the gas used in industries to homes.
Iran currently imports about 35-40 million cubic meters a day of gas from Turkmenistan under a deal which has stood for the past 20 years.
Minister of Petroleum Bijan Zangeneh has announced that if Turkmens insisted on halting the gas flow, Iran would stop its energy dealings with the country, IRNA said on Wednesday.
“According to experts, Ashgabat would be the biggest loser of this dispute,” the news agency added.
Turkmenistan is a landlocked nation and its shipment of gas to international markets has to go through the neighbors, including Iran.
A fallout with Iran would deprive Turkmenistan not only of its biggest customer but a valuable route for transit or swap of gas to markets in the subcontinent, the Persian Gulf, Europe and beyond.