Iran could pay its $1.9 billion indemnity to Turkey by exporting oil, natural gas and electricity instead of cash payment, according to energy expert Chris Cook.
Iran, in compliance with the arbitration ruling on overcharges of natural gas prices to Turkey between 2011 and 2015, will decrease gas prices to Turkey by 13.3 percent and pay $1.9 billion in compensation in natural gas supplies, Berat Albayrak, Turkey's energy and natural resources minister said on Wednesday in Madagascar's capital Antananarivo.
"There is no reason why Iran cannot pay Turkey using any and all of these forms of payment (energy supplies), but of course the problem is that cash payments acceptable to Turkey such as dollars and euros are precisely those that are the most challenging for Iran to access during this 'post sanctions' period," Cook, Petro Scotland managing director and senior research fellow of University College London said on Thursday.
"Iran could issue Turkey with an agreed quantity and mix of energy credits returnable in payment for amounts of electricity, natural gas or even grades of oil, at pre-agreed dollar prices per unit," he added.
Cook underlined that as Iran has some of the world's largest reserves of fossil fuels, its credit in terms of energy supply is good.
In 2012, Turkey sued Iran in the International Court of Arbitration for overpricing on gas purchases during the four-year period from 2011 to 2015.
The court ruled in favor of Turkey in February 2016 and ordered that both parties agree on a reduction between the rates of 10 percent and 15 percent in the price of Iranian gas exports to Turkey.
"As a result, it leads to simple payment options which are complementary to existing payments," Cook said.
As an example, Iran could supply an additional 20,000 barrels of oil per day or an equivalent flow of natural gas which may be paid for by an agreed entitlement to prepaid energy credits negotiated at an agreed market price, Cook concluded.
(Anadolu Agency)
