Ankara Hopes Putin Visit Will Yield Gas Price Cut

Turkish officials have intensified lobbying to make sure Russian President Vladimir Putin's visit to Ankara on Dec. 1 will result in a discount in the price of the gas Turkey buys from Russia, sources familiar with the matter have said on Thursday.

Russia has yet to agree a price with Turkey for its planned increase in gas supplies to the country, officials said on Wednesday, as Moscow tries to diversify supply to counteract a rift with the West. Turkish Energy Minister Taner Yıldız was in Moscow this week, walking a thin line between a price cut and also an increase in Russian gas supply to Turkey.

If a deal on price cut is reached, it will be Putin who will announce this and probably before he leaves Turkey, Turkish media cited energy ministry officials as saying on Thursday. Yıldız had said in April that Russia's Gazprom would boost the capacity of the Blue Stream undersea gas pipeline to deliver another 3 billion cubic meters a year to a total of 19 billion cubic meters (bcm) a year in total. No timetable for the increase was announced at the time. Yıldız said Ankara expected Russia to provide a discount for Russian gas supplies, including for the new supplies. Many of Gazprom's clients, including Italy's Eni, have successfully won discounts in long-term contracts as the Russian state-owned company tries to defend its market share in Europe.

"We expect Gazprom to put forward its proposal [on a discount] according to market conditions and this will be the new contract," Yıldız told reporters in Moscow after meeting Russian Energy Minister Alexander Novak and Gazprom officials.

Speaking about the pipeline's capacity and supply increase, Novak said: "This has to be economically viable for both sides... Our companies are discussing the price." He added that the supplies may increase in 2016. Turkey is the second-largest buyer of gas from Russia, with Russian gas covering about 60 percent of Turkey's needs. Gazprom has said that Russian gas supplies to Turkey were set to reach a record high of 30 billion cubic meters this year from 25.6 bcm last year to meet rising demand.

Gazprom said on Wednesday that its CEO, Alexei Miller, had met Yıldız to discuss issues of strategic cooperation. Ankara has sparred with Moscow in the past over what it sees as high prices of long-term contracts. Moscow is seeking ways to diversify its energy supplies away from the European Union, which imposed wide-ranging sanctions against Russia for its role in the Ukraine conflict.

Turkey is a strategic partner for Russia and has sided with Moscow on the South Stream undersea gas pipeline project to Europe, which will deliver gas to southern and western Europe while bypassing Ukraine.

The European Union, which is trying to cut its reliance on Russian energy, has queried the project, which it sees as entrenching the Kremlin's energy stranglehold on Eastern Europe.

(Cihan/Today's Zaman)