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UPDATE 2-Turkey's Botas seeks arbitration over Russian gas deal
October 27, 2015 / 11:07 AM / 2 years ago

UPDATE 2-Turkey's Botas seeks arbitration over Russian gas deal

* Russia, Turkey at loggerheads over gas price discount

* Gazprom sees possibility of out-of-court solution

* Dispute comes as relations soured by Syria (Updates with details, background)

By Orhan Coskun

ANKARA, Oct 27 (Reuters) - Turkish pipeline operator Botas said on Tuesday it would take Russia’s Gazprom to international arbitration over a price discount it said it was promised on imports of Russian natural gas.

Russia has looked to bolster gas ties with Turkey after the European Union rejected its proposed South Stream pipeline to Bulgaria but political relations have soured over Moscow’s military involvement in Syria.

Turkey announced a deal in February under which it was to receive a 10.25 percent price discount on gas from Gazprom but a final deal has proved elusive and state-run Botas said it had appealed to the International Chamber of Commerce (ICC).

Botas said 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.

A spokesman for Gazprom said: “The possibility of an out-of-court settlement as well as an arbitration decision still remains.”

“Gazprom has failed to sign the amendments regarding the agreement on price discount between the two companies,” Botas said in a statement. It said it had written a final letter to Gazprom calling on it to sign the deal.

Turkish energy officials have said Russia has added preconditions for finalising the gas deal linked to its planned TurkStream gas pipeline.

Russia is Turkey’s largest gas supplier with sales of 28-30 billion cubic metres annually worth around $6.5 billion.

Turkey imports 60 percent of its gas and 35 percent of its oil from Russia. Russians also make up a growing proportion of Turkey’s tourist traffic, key for financing the country’s current account deficit.

But political relations have soured since Russia began air strikes in Syria in support of President Bashar al-Assad, whose removal from power has long been advocated by Turkish President Tayyip Erdogan.

Gazprom said this month it had decided to halve the planned capacity of TurkStream to 32 billion cubic metres of gas per annum and delay its launch, in further evidence of strained relations. (Additional reporting by Dennis Pinchuk and Vladimir Soldatkin in Moscow; Writing by Humeyra Pamuk; Editing by David Dolan and David Clarke)

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