Russia’s Gazprom signs protocol with Turkey on TurkStream gas pipeline

MOSCOW - Reuters

Russian state gas giant Gazprom said on May 26 it had signed a protocol with the Turkish government on a planned gas pipeline and agreed with Turkish firm Botaş to end an arbitration dispute over the terms of gas supplies.

The protocol concerned the land-based part of the transit leg of the TurkStream gas pipeline, which Gazprom said meant that work to implement it could now begin.

Turkey had delayed issuing a permit for the Russian company to start building the land-based parts of the pipeline which, if completed, would allow Moscow to reduce its reliance on Ukraine as a transit route for its gas supplies to Europe.

A source speaking to the agency said in February the permit problem might be related to talks between Gazprom and Botaş about a possible discount for Russian gas.

Turkish President Recep Tayyip Erdoğan said earlier in the day Turkey and Russia had reached a retroactive agreement for a 10.25 percent discount on the natural gas Ankara buys from Moscow.

Gazprom said in the May 26 statement, without elaborating, that the dispute with Botaşwould be settled out of court.

Speaking at an election rally in eastern Turkey’s Erzurum, Erdoğan said a $1 billion payment will be made to Turkey under the deal, which followed a Turkish request for a discount on gas first made in 2015.

Turkey had gone to arbitration after its request was not met, Erdoğan said.

“After long talks, we reached agreement on a 10.25 percent price discount on the natural gaswe receive from Russia, covering the years 2015 and 2016,” he said.

“With the agreement which we have reached, a payment of $1 billion will be made to our country to cover the discount for the natural gas we received in those two years,” he added.

Turkey is the biggest consumer of Russian gas after Germany.

Russia’s Gazprom, which has a de facto monopoly on Russian gas exports by pipeline, supplies gas to Turkey’s Black Sea coast via an underwater pipeline called Blue Stream with a capacity of 16 bcm per year.