Iran reportedly seeks to boost gas exports to Turkey in return for ships

By bne IntelliNews March 5, 2013

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Continuing to seek avenues to circumvent international sanctions, Iran is hoping to sign a new contract for increased gas exports to Turkey, according to local media, and could take ships in payment following a clampdown on the previous scheme that depended on gold.

Tehran expects to sign a new agreement with Ankara raising gas exports to as much as 35m cubic metres (cm) per day at the Economic Cooperation Organization summit which kick off on March 4, according to Iran's press.tv.

The Persian Gulf state remains Turkey's second-largest gas supplier, despite the international sanctions against Iran over concern that it is developing nuclear capabilities. Unable to easily replace the imports from other sources, Turkey has rejected calls from the US and its allies to reduce its purchases of Iranian oil and gas.

Throughout 2012, Turkey was paying for Iranian hydrocarbons with a less-than-elaborate scheme designed to sidestep the sanctions, which aim to stop Tehran accessing payment for the energy to use in its nuclear programme. Turkey would pay through state-owned Halkbank. Iran would then use the Turkish lira received to buy gold at the bank, to be shipped back to Tehran by courier. Halkbank was also reported to be facilitating payments for other major customers of Iranian energy such as India.

However, Washington moved to eliminate the scheme in December by tightening sanctions, forcing Halkbank to halt the operation. Consumers must now pay in their local currencies, with the funds kept in escrow accounts. Iran can use these only for locally sourced goods and services, in what will amount to barter arrangements, reports Bloomberg.

To that end, Iran is currently $3bn in credit over Turkey's gas bill, and according to Iranian state newswire Fars is mulling a plan in which it would import commercial and leisure ships in lieu of the cash. Iran previously sought to buy ships and tankers from major customers China and India, the official said.

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