Iran has rejected reports that it has reduced the price of its gas exports to Turkey in the latest bilateral spat about prices. Managing Director of the National Iranian Gas Company, Roknoddin Javadi, said that any negotiations (and price reductions) are subject to Turkey\'s accepting Iranian conditions, including the through-flow of Iranian gas into Europe from current excess gas supplies and an independent gas pipeline, according to the Petroenergy Information Network. Turkish Prime Minister Recep Erdogan is expected to arrive in Tehran (Iran) on 28 July to continue discussions on the issue. The initial bilateral gas agreement was made in 1996 and involved the export of up to 10 Bcm a year of Iranian gas through the pipeline, which became operational in 2001. Despite Iranian talk of transporting gas supplies to Europe through Armenia (via Russia and Ukraine), Turkey remains the most viable transit option in geographic, operational and cost terms. However, Turkey\'s frequent interruption of Iranian supplies and demands for lower prices, have made it a politically unreliable partner in this regard, as it plays off Iran against Russia and the Caspian states, all of whom need Turkey as a market and transit route to Europe. Iran must be hoping that meeting Turkish price terms will resolve this issue once and for all and give it the long-hoped-for access to European markets, which could become a reality after the completion of the Turkish-Greek interconnector that will begin construction at end-2004. However, with Caspian supplies set to begin in two years and further Russian supply availability, it is likely that Turkey will continue to play the slippery intermediary to extract the maximum gains from its new role as the gateway to Europe. This means that Iran needs to continue its focus on the LNG and nearby pipeline market to improve its negotiating position vis-a-vis Turkey in the medium term. (World Markets Research Centre Limited.)