The details of a July natural gas exploration and transportation agreement between Turkey and Iran, over U.S. objections, are now becoming clearer.

According to the agreement, Iran will pay 20 percent of profits from the natural gas extracted from the South Pars field to Turkey in compensation for exploration costs.
The Turkish Petroleum Corporation (TPAO) will invest around $3 billion in the region. The project, forecast to be completed in seven years, will claim $3.6 billion from Iran with the addition of the 20 percent profit margin.
Iran will pay this sum in installments lasting from eight to 10 years, either in cash or in natural gas. Negotiations for the project will continue until February 2008. The final agreement is expected to be signed in April 2008, with groundbreaking at the end of the year. A TPAO authority, who spoke on condition of anonymity, said Iranian officials had offered a 15 percent profit margin.
""We expected 25 percent, and we made a deal on 20 percent,"" he said. The agreement between the two countries also covers the transportation of 35 billion cubic meters from Turkmenistan to Europe.
With this agreement, which allows Turkey to export Iranian and Turkmen gas to Europe, the exploration and extraction of three natural gas fields in the South Pars, which has 14 trillion cubic meters of reserves, will be given to Turkey.
The TPAO will operate these fields and has the ability to produce 56 million cubic meters of gas daily. On an annual basis, the company has a production capacity of 20 billion cubic meters.
After a visit of Energy Minister Hilmi Güler to Iran in the weeks following the gas agreement, another memorandum of understanding was signed between the two countries on electricity. With this memorandum, the construction of three thermal power plants and one hydropower plant was decided. These plants are estimated to be capable of generating six billion kilowatt hours of electricity in total. The locations of the power plants will be determined at a later date.
The agreement was not welcomed by the U.S., which is trying to expand sanctions on Iran. There is a probability that this agreement will harm Turkish foreign policy due to U.S. objections. The energy minister's determination vis-à-vis the agreement has caused widespread debate. Turkey insists on joint company for gas transport to Europe.
(Source: Today’s Zaman