PJSC Gazprom Adr. (OGZPY)

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Gazprom reaches pipeline deal with Turkey
14 minutes ago

Gazprom has reached a deal with Ankara for the "Turkish Stream" pipeline to start operation by December 2016, the Russian gas giant said on Thursday.

Turkish Stream was proposed in December after Russian president Vladimir Putin scrapped the contentious "South Stream" pipeline project, which would have circumvented Ukraine to deliver Russian gas to Southern Europe across the Black Sea but ran into opposition from the European Commission, reports Jack Farchy in Moscow.

Since then, Gazprom has been negotiating with the Turkish government and state energy company Botas to build the alternative Turkish Stream, following much the same route as South Stream but landing in Turkey rather than Bulgaria. Ankara has dragged out the negotiations in hopes of securing a hefty price discount on Russian gas, according to people close to Gazprom.

On a visit to Ankara on Thursday Alexei Miller, chief executive of Gazprom, said that the two sides had reached an agreement.

He said:

An agreement was reached on the start of operation and deliveries of gas through Turkish Stream in December 2016. Gazprom will use the agreements reached today as the basis for its work schedule on the Turkish Stream project.

Mr Miller did not mention any renegotiation of gas prices for Turkey. Taner Yildiz, the Turkish energy minister, in March said that the two sides had agreed a 10.25 per cent discount.

Turkey is Gazprom's second-largest market after Germany by sales, and one of its most prospective growth markets. Mr Miller said that Gazprom's deliveries of gas to Turkey through the Blue Stream pipeline under the Black Sea had risen 4 per cent in the first four months of the year from the same period a year earlier.

Below Alexey Miller, the chairman of Gazprom, and Taner Yildiz, Turkey's energy minister, examine the possible route for the pipeline.