The Turkmen foreign ministry released a note on January 3 which said the Turkmen government has decided to restrict natural gas exports to Iran, saying, “Its ability to maintain its gas transportation infrastructure has been compromised by Iran's failure to continue paying off old debts since 2013.”
The statement reads as follows:
In response to the recent move by the Turkmen government to restrict natural gas shipment to Iran, NIGC would like to announce that:
1. the company, over the course of the recent years, has had the courtesy to clear all its dues and a part of the debt arrears through various methods to Turkmengaz which amount to over $4.5 billion.
What remains to be paid by NIGC is the amount the company could not have been able to clear during the years Iran was targeted by the sanctions which restricted direct payments to foreign banks; however, settlement of some debts was made under the sanctions by exporting goods and services to the Turkmen side besides issuance of guarantees by NIGC for the export of hundreds of millions of dollars worth of goods and services for exporters to Turkmenistan.
2. parallel with talks concerning repayment of its debts to Turkmengaz, NIGC regards the Turkmen side responsible for violating articles of the export deal time and again which affected the quality and quantity of the gas flow to Iran and has earnestly demanded to hold talks for resolving such matters without any response from the Turkmen side.
3. NIGC is currently under the impression that the legal, contractual and financial disputes between it and the Turkmengaz have been addressed in the gas deal and solutions have been offered in its articles, and that the two sides shall act solely in accordance with the path stipulated by the contract. Likewise, NIGC trusts that direct dialogue shall be the only way to address mutual disputes, however, given the fact that hour-long discussions between the two companies have proved futile, NIGC has reserved itself the right to follow up on the issue through international arbitration.
4. it has been specifically made clear in the contract that Turkmengaz, even in the case of mounting debts or dues by NIGC, shall not be allowed to cut off gas shipments to Iran and such acts would be outright violation of the initial gas deal between the two companies and an indication that Turkmengaz is not a reliable partner in international transactions.
5. regarding the fact that NIGC maintains that the created financial and legal row is merely an issue between NIGC and Turkmengaz, political authorities of Turkmenistan are respectfully expected to let the two sides of the dispute resolve their issues based on the articles set out in the contract and in accordance with commercial principles. Moreover, interference of the respected foreign ministry of Turkmenistan in this legal row is a vivid violation of the deal’s articles.
6. NIGC has publicized its official stance regarding the dispute on its website on January 1 2017; with regard to the freedom of speech for the media in the Islamic Republic of Iran, NIGC shall not be held responsible for the veracity of what Iranian media outlets have released regarding the issue.
Public Relations Department
National Iranian Gas Company