Bloomberg News

Turkey Says Russia Gas Price Cuts May Be Revised After 3 Years

December 29, 2011

Dec. 29 (Bloomberg) -- Turkey secured a price cut that may be subject to a revision after three years in natural gas purchase contracts signed with OAO Gazprom in Moscow yesterday, Energy Minister Taner Yildiz said, without giving the amount.

“We got a good price reduction from Russia,” Yildiz said at a news conference in Ankara today. “The cuts will be valid for at least the first three years before a revision option for both sides takes effect.” The reduction applies to Turkey’s purchases from Russia via the Blue Stream gas pipeline that crosses the Black Sea and the western pipeline through Ukraine and Bulgaria.

Botas Boru Hatlari Ile Tasima AS, the Ankara-based state pipeline concern known as Botas, has three contracts to buy gas from Gazprom, according to its web site. The first contract for 6 billion cubic meters signed in 1986 expires early next year and a second contract for 8 bcm along the same route will expire in 2021. The Blue Stream contract will end in 2022. Yildiz said Blue Stream and the second contract on the western pipeline are extended to 2025 now.

The reduction will “improve factors that will negatively affect” the balance sheet of Botas, Yildiz said. Gazprom will also meet a part of higher gas costs Turkey faces because of a weaker lira and that will particularly affect this year’s costs, he added.

To contact the reporter on this story: Ali Berat Meric in Ankara at americ@bloomberg.net

To contact the editor responsible for this story: Steve Bryant at sbryant5@bloomberg.net


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