The National Iranian Gas Company (NIGC) intends to take its recent gas dispute with Turkmenistan to international arbitration, Mehr News Agency reported on January 4, citing the company’s response to the Turkmen foreign ministry.

The dispute arose after Turkmenistan stopped gas exports to Iran on January 1 over $1.8bn owed by Iran for gas exports. Turkmenistan had already suggested taking the issue to the court, as both countries issued warnings to each other throughout December. Tehran claimed in a statement that it had paid the money that had been owed to TurkmenGaz for over a decade.

“In recent years, the National Iranian Gas Company, in good faith and in different ways, has retired its outstanding debts to Türkmengaz which amounted to over $4.5bn,” NIGC’s latest statement said. “Therefore, the remaining debt pertains to sanction years during which, despite restrictions on direct payment, considerable sums were handed over to the Turkmens in the form of goods and service exports in addition to the issuance of warranties worth hundreds of millions of dollars for exporters of goods and services.”

NIGC added that “Türkmengaz has committed numerous violations of the terms of the contract, including in the quality and quantity of deliveries, which are subject to penalties provided in the contract”.

Iran has vast reserves of gas in the south of the country but has a gas swap deal with Turkmenistan to top up supplies during the cold winter months.