Turkmenistan trilateral natural gas deal
A trilateral Turkmenistan-Iran-Azerbaijan natural gas trade agreement will go into effect today.
The agreement calls for 1.2 to 2 billion cubic meters of natural gas to be sold from Turkmenistan to Azerbaijan and transported through Iran. The Turkmen gas will be traded at the northern Turkmenistan-Iran border and exchanged for an equivalent amount of Iranian gas at the Iran-Azerbaijan border. The contract has no end date.
The deal helps thaw chilly Turkmen-Iranian relations. Turkmen gas is important for powering Iran’s northern provinces, which have limited access to the country’s southern gas fields. However, due to this, Tehran owes Turkmenistan $1.8 billion for gas deliveries. Iran, benefiting from regional infrastructure, transportation, and shipping development from the deal, will now begin to pay off that debt.
Expect Iran to soon begin making payments to Turkmenistan. As they are likely to gain the most from the deal, Tehran is unlikely to take any action to jeopardize it. Short-term, the deal will strengthen Iranian relations with both countries, giving Iran greater sway in Central Asia. Medium to long-term, should the deal hold, Iran will likely be positioned to become a major regional gas hub connected to many major transport pipelines, increasing its economic power.
Wake up smarter with an assessment of the stories that will make headlines in the next 24 hours. Download The Daily Brief.
