Gazprom Cancels Gas Discount for Turkey

Source: Reuters 1/29/2016, Location: Asia

Russia's Gazprom has cancelled a discount in gas prices for Turkish customers, industry officials said, in the latest salvo in a diplomatic and trade row after Turkey shot down a Russian war plane two months ago.

Turkey said last year it struck a deal giving it a 10.25 percent price discount on gas from Russia's Gazprom but a final signature on the accord had been delayed, prompting state pipeline operator Botas to appeal to the International Chamber of Commerce (ICC).

Officials from Turkey's private sector gas companies told Reuters that Gazprom had cancelled the discount and alerted the Turkish companies last week during a meeting in Vienna.

"Following this, private sector companies have begun sending notifications to their customers about the new situation. The new price and how it will be applied retrospectively is yet to be figured out," an executive at a private sector firm said.

Gazprom declined to comment on the issue but sources close to the company denied the report and said negotiations were still underway.

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.

The two countries have been at loggerheads since Turkey downed a Russian warplane along the Turkey-Syria border two weeks ago saying it violated its air space, the most serious incident between Russia and a NATO member state in half a century.

They have long been in disagreement over Syria and the future of Syrian President Bashar al-Assad, a Moscow ally who Turkey says needs to be removed.

Another private sector official said once the cancellation of the price cut comes into effect, the import price for Russian gas for private sector supplies would rise to $196-197 per every thousands cubic meter.

Energy Minister Berat Albayrak said earlier this week that Botas was conducting work to reduce the price of natural gas, an effort that private sector officials said could prove to be tricky with the price cancellation.


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