Turkmenistan is ready to continue talks with Iran after cutting gas supplies to Tehran this month but also has the right to take the dispute over payments to arbitration, the Central Asian nation's foreign ministry said on Thursday.

The ministry said in a statement that Iran's debt stemmed from the National Iranian Gas Company's failure to abide by the "take or pay" provision of the gas supply contract.

Tehran said in December that Turkmenistan had threatened to stop gas exports because of arrears in payments, which amounted to about $1.8 billion and dated back more than a decade. Iran wanted to refer the issue to arbitration.

Iran has its own major gas fields in the south of the country but has imported gas from Turkmenistan since 1997 for distribution in its northern provinces, especially during the winter.

Turkmenistan in turn faces a foreign currency shortage after Russia, once a major buyer of its gas, halted purchases last year, leaving China as its biggest customer.

(Source: Reuters)