Turkey takes Russia to arbitration over gas price dispute

Turkey said in February it had obtained a 10.25 percent price discount on the 28-30 billion cubic meters (bcm) of gas it buys from Russia each year but the two sides have been at loggerheads over the deal for months.

Botaş, which is also Turkey’s state pipeline operator, said in a statement it notified Russia’s Gazprom on Monday that the arbitration would aim to cover the price of Russian natural gas purchased since the start of the year.

Gazprom, the world’s top gas producer, said there was still a possibility of an out-of-court settlement with Turkey over the gas price dispute.

“The negotiations have been ongoing for quite some time and as of Monday the appeal to ICC has been submitted,” a Turkish energy official told Reuters.

Turkish energy officials have said Russia has been adding demands regarding Turkish Stream, a major pipeline project designed to bring Russian gas to Turkey and southern Europe, as a precondition for signing off on the gas price deal.

“We had agreed with Russia on the 10.25 percent discount and this has not been put in effect due to various excuses. We are confident that we will get this discount through arbitration,” an energy ministry official said.

Turkish energy officials told Reuters in June that the contract between Gazprom and Botaş reserved the right to appeal to arbitration if there were no breakthrough in the talks for six months.

“The possibility of an out-of-court settlement, as well as an arbitration decision still remains,” said Gazprom spokesman Sergei Kupriyanov.

Relations between the two countries have soured since Russia began air strikes in Syria earlier this month, largely bombing Syrian insurgents that Turkey has long championed and flying into Turkish airspace.