Iran Oil Industry Not to Give Up

IRAN NEWS ECONOMIC DESK

TEHRAN – Oil Minister Bijan Zangeneh said the message sent by today’s contract between the National Iranian Oil Company (NIOC) and a local oil company for developing Yaran Joint Oilfield is Iran will not give up under the US sanctions.

Speaking to reporters following a ceremony to sign the deal on Saturday, Zangeneh said: “The message of the agreement is that we stand up firm and do not give up.”

Regarding the Iran-Turkmenistan gas dispute, Zangeneh said according to the ruling the by international arbitration, the National Iranian Gas Company (NIGC) was not subject to payment of any damages to the Turkmen side.

Elaborating on the gas dispute between National Iranian Gas Company (NIGC) and Turkmen Gaz, he said the case concerned a trade contract between the two companies in which a dispute was created as the Turkmen side had failed to fulfill its commitments claiming that NIGC was in arrears with payment for the gas.

Zangeneh said, “We were unable to transfer the money due to the sanctions; Even the National Iranian Gas Company accepted had agreed to undergo interests that accrued on the basis of the contract due to non-payment of debt, and even part of this debt was paid in the form of goods and services, but Turkmen Gaz insisted on receiving the money in full. And in this regard, they did not show flexibility to negotiate. The National Iranian Gas Company raise the issue of arbitration and announced that if the case went to arbitration, the price of Turkmen gas should also be considered in the arbitration, because according to the National Iranian Gas Company, the price of Turkmenistan due to the additions to the previous contract, was high and unfair. On the other hand, NIGC had agreed that Turkmen Gaz failures to fulfill its commitments in terms of quality and quantity of the gas needed to be considered as well. In the end, they did not accept the proposal to raise the issue in arbitration, but sometime later, they took the case to arbitration.”

The oil minister stated that what was decided in the arbitration was not a far-fetched result: “The arbitration decided that the National Iranian Gas Company should pay its debt to Turkmen Gaz, but the arbitration order did not impose any fines or damages on NIGC. On the other hand, the arbitrator agreed with a significant part of the claim of the National Iranian Gas Company regarding the fine related to the quantity and quality of Turkmen gas, so that this amount of the fine is deducted from the debt of the National Iranian Gas Company.”

Reminding that Iran has not been able to transfer money due to the sanctions, Zangeneh added: “Again, there must be a discussion and a solution on how to pay Iran’s debt. The government and people of Turkmenistan are friends and we want to work with this neighboring country in the long run. Trade disputes are raised and resolved internationally, and it is not a matter of saying who won, who lost, or who was frustrated. As the National Iranian Gas Company and Turkey’s Butas Company went to arbitration and at the same time continued their friendly relations.”

He said, “Also, based on the arbitration ruling, the two existing contracts between the two companies, part of which was not in Iran’s favor and were imposed on us by Turkmenistan due to a gas shortage, were considered terminated.”

In response to a question about the possibility of signing a new contract between the two companies, Zangeneh said, “This issue is considered in the context of long-term relations between the two countries.”

The minister added, “Capacity building for the oil industry is a strategic matter. We have seen such problems before and God willing, we will overcome them and we need to build enough capacity for the day when we re-enter the market. As after the previous embargo, the world was surprised that Iran’s oil industry returned to its maximum production capacity in less than four months.”

Underlining the need to rely on Iran’s capabilities and capacity to advance oil industry projects, the Oil Minister said, “For the Iranian Oil Ministry, the principle is to make maximum use of domestic manufacturing equipment and we have also notified contractors of this requirement.”