Turkey and Iran's decision to trade in national currency is technically feasible particularly for bilateral energy trade, according to Secretary General of the Gas Exporting Countries Forum (GECF) Dr. Seyed Mohammed Hossein Adeli, on Thursday.
Adeli, in an exclusive interview with Anadolu Agency in Moscow, welcomed Turkey and Iran's agreement on using national currency following the trend to use this over international currencies like the dollar.
"If sanctions, restrictions and political considerations are somehow limiting the countries' free trade, they will start having more willingness to do it [trade in national currencies]," Adeli said.
He asserted that this practice will have a knock-on effect on other countries that will follow suit when they see that it is not just possible but profitable.
In response to the question of the gas price dispute between Turkey and Iran, Adeli expressed his hope that a resolution can be found through the meeting held on Wednesday between Turkish President Recep Tayyip Erdogan and his Iranian counterpart Hassan Rouhani in the capital Tehran.
"If Erdogan has gone to Iran, it is a great and historic opportunity to come to some settlement. Why not? As an Iranian, I hope there will be much closer relations between Iran and Turkey. Two great countries of the region have to be friends, and they have great potential," he stressed.
During Rouhani's press conference late on Wednesday, he said, "One of the most important decisions made is the use of national currency in commerce for developing banking relations between the two countries."
He added that the decision would be finalized next week.
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 of between 10 percent and 15 percent in the price of Iranian gas exports to Turkey.
Adeli, in response to recent news of Iran ranking as Turkey biggest crude oil exporter, reacted philosophically and said that any kind of cooperation between Iran and Turkey is natural.
"Because these two countries have lots of things in common. This is why I'm not surprised the two countries agree to have much closer cooperation. This will just demonstrate the wisdom of the leadership of the two countries," he explained.
He said that more stability in Iran and Turkey's geographical region would lead to greater trade.
US shale gas will not be game changer
Adeli played down the potential role that U.S. shale gas can play in the global market. He said the U.S. exported 3.5 million tonnes of shale gas last year while this year exports so far amounted to 8 million tonnes.
He explained that this only amounts to 3 percent of the global LNG market, adding, "a player who is playing with 3 percent cannot potentially be a game changer."
The cost of U.S. LNG is also a very important factor in reaching other parts of the world, especially Europe and East Asia, which is very expensive, he said.
"I don't think it [LNG trade] would be justifiable for both the exporter and the buyer. Those who are buying it buy at a higher price - higher than they can buy from Qatar and Australia for example," he said.
"They may buy one, two or three LNG shipments and then they will stop it. From the exporter point of view, if they lose as they are doing right now, this is not going to be sustainable and they will not be a game changer at all," he added.
GECF is an international governmental organization that provides the framework for exchanging experience and information among member countries, with the objective of increasing the level of coordination and strengthening collaboration.
The forum allows the world’s leading gas producers to meet, and member countries are, Algeria, Bolivia, Egypt, Equatorial Guinea, Iran, Libya, Nigeria, Qatar, Russia, Trinidad and Tobago, United Arab Emirates and Venezuela.
Azerbaijan, Iraq, Kazakhstan, the Netherlands, Norway, Oman and Peru have observer member status.