Talks over gas discount with Russia promising, says Turkish minister

ANKARA - Anadolu Agency

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Negotiations with Russia over a discount in the price of natural gas via a new gas pipeline to Turkey “look promising,” Turkish Energy Minister Taner Yıldız said late on Jan. 27.

Yıldız told private broadcaster NTV that two previous meetings were “not successful,” but ongoing talks with Gazprom CEO Alexey Miller were more promising.

“With the oil price slump, gas prices are falling as well. This negatively affects gas producing countries like Russia, and also puts a strain on the ongoing negotiations,” he said.

Yıldız added that the current gas prices are at the November 2008 level, despite the recent rise in the value of the U.S. dollar.

Natural gas prices are mostly indexed to crude oil prices. As gas contracts are renewed every six months, prices for new gas contracts are determined by past prices of crude oil.      

The 6 percent gas price discount granted by Russia to Turkey is not final, Yıldız had said in December 2014.

“We have also agreed with the Russian delegation in principle that we will move on to take more solid steps toward the new gas route through Turkey, instead of having non-binding agreements,” he said at the time.

Also in December, Russian President Vladimir Putin scrapped the South Stream natural gas pipeline project planned to pass through Bulgaria to Europe, and announced a new natural gas pipeline route through Turkey’s northwestern Thrace region. He also announced that a natural gas hub on the Turkish-Greek border would be built.

The project, named “Turkish Stream” by some analysts, is planned to carry 63 billion cubic meters of natural gas annually. Construction is planned to start before the end of 2016.