UPDATE 1-Iran says Turkmen gas supplies cut in row over terms

Reuters Middle East

(Adds background, denial by Turkmen official)

DUBAI, Nov 14 (Reuters) - Supplies of gas from Turkmenistan

to Iran have been halted due to a dispute over purchasing terms,

Iranian Oil Minister Rostam Qasemi said on Wednesday, while a

Turkmen government official denied flows had been stopped.

Iran, which supplies gas to Turkey, relies on gas from

Turkmenistan to supply the cold north eastern region winter.

Qasemi called on oil products distribution companies in the

region to help ensure alternative fuel supplies over winter.

"Negotiations between the two countries are ongoing and it

is foreseen that with a final agreement, natural gas imports

from this neighbouring country will resume," Qasemi was quoted

by the semi-official Mehr news agency as saying.

A Turkmen government official told Reuters in the Turkmen

capital Ashgabat that flows of gas to the Islamic Republic

continued Wednesday.

"Natural gas supplies continued this morning according to

schedule. The issue of price has never been a problem with

Iran," the source said.

"For some time there have been repair works on a pipeline

stretch between Turkmenistan's Artyk and Iran's Lutfabad, but

now gas flows even via this part of the pipeline route."

Qasemi did not say when flows of gas from Turkmenistan had

stopped, but said he hoped Turkmenistan would resume gas exports

under the terms of existing contracts and new agreements,

Iranian oil ministry news website Shana reported.

As Iran exports natural gas to Turkey and Armenia, a lengthy

stoppage of Turkmen gas flows into the country could prompt Iran

to stop supplies to its neighbours.

Iran buys almost a third of Turkmenistan's exported gas

which it relies heavily on for heating in winter and needs year

round to meet industrial demand in parts of the country that are

far from and poorly connected to its own fields clustered around

the Gulf.

Iranian imports of Turkmen gas averaged just over 1 billion

cubic feet a day from July 2011 to June 2012, according to the

U.S. Energy Information Agency, but imports are much higher in

winter and lower in summer.

Iran has been importing natural gas from Turkmenistan since

1997. Western-imposed banking restrictions have made it

difficult for Iran's suppliers and buyers to trade with Tehran.

For a factbox on Iran's gas trade click:

(Reporting by Yeganeh Torbati and Daniel Fineren in Dubai, .";

Additional reporting by Marat Gurt in Ashgabat; editing by James

Jukwey and Patrick Graham)

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