Turkey and Russia signed a bilateral agreement on Oct. 10 to build the TurkStream undersea gas pipeline, which will allow Moscow to strengthen its position in the European gas market and cut energy supplies via Ukraine.
The agreement was signed in Istanbul in the presence of Russian President Vladimir Putin and Turkish President Tayyip Erdogan.
The deal foresees construction of two pipelines on the bed of the Black Sea. It was reported earlier that each line from Russia to Turkey would have the capacity to carry 15.75 billion cubic meters (Bcm) of gas a year.
A spokesman for Russian state gas producer Gazprom declined to comment on the financial details of TurkStream.
As part of the deal, Russia also agreed on a gas price discount mechanism for Turkey, Putin said.
Turkey is the biggest buyer of Russian gas after Germany, but a gas price dispute between Turkish pipeline operator Botas and Russia’s state gas producer Gazprom led to Botas launching international arbitration proceedings against Gazprom in October 2015.
Russian Energy Minister Alexander Novak told reporters on Monday that talks with Botas on a price discount were underway.
TurkStream is part of Russia’s plans to bypass Ukraine, which is the main route for Russian energy supplies to Europe. Spats over pricing between Kiev and Moscow have led to suspensions of Russian gas flows to Europe via Ukraine.
Talks on TurkStream were halted after the Turkish military downed a Russian jet fighter near the Turkish-Syrian border last November, but both sides have since made significant progress to mend relations and agreed to revive trade relations in July after Erdogan expressed regret over the incident.
The plan for TurkStream emerged after Russia dropped plans to build the South Stream pipeline to Bulgaria due to opposition from the European Union, which is trying to reduce its dependence on Russian gas.
Initially, Russia had planned to ship 63 Bcm of gas via TurkStream annually, some of it for onward delivery to Europe, but downsized the plan after opposition from the European Union.
Recommended Reading
Chevron Targets Up to $8B in Free Cash Flow Growth Next Year, CEO Says
2025-01-08 - The No. 2 U.S. oil producer expects results to benefit from the start of new or expanded oil production projects in Kazakhstan, U.S. shale and the offshore U.S. Gulf of Mexico.
Oil, Gas and M&A: Banks ‘Hungry’ to Put Capital to Work
2025-01-29 - U.S. energy bankers see capital, generalist investors and even an appetite for IPOs returning to the upstream space.
Artificial Lift Firm Flowco’s Stock Surges 23% in First-Day Trading
2025-01-22 - Shares for artificial lift specialist Flowco Holdings spiked 23% in their first day of trading. Flowco CEO Joe Bob Edwards told Hart Energy that the durability of artificial lift and production optimization stands out in the OFS space.
Utica’s Infinity Natural Resources Seeks $1.2B Valuation with IPO
2025-01-21 - Appalachian Basin oil and gas producer Infinity Natural Resources plans to sell 13.25 million shares at a public purchase price between $18 and $21 per share—the latest in a flurry of energy-focused IPOs.
Utica’s Encino Adds Former Marathon Director to Board
2024-12-16 - Brent J. Smolik, who most recently served on Marathon Oil’s board until its merger with ConocoPhillips, will join Encino Acquisition Partners as a director.