UPDATE 1-Turkey to seek discount in Russian gas price - minister

Fri Apr 18, 2014 4:33am EDT

(Adds quotes, details, background)

By Ozge Ozbilgin

ANKARA, April 18 (Reuters) - Turkey will seek a discount in the price of gas it buys from Russia in talks with the deputy head of state-controlled Gazprom next week when he visits Ankara, Turkey's energy minister said on Friday.

"The contract we have with Russia gives us the right for a price revision. We will convey our demands about this to the Russian and Gazprom officials," Taner Yildiz told reporters.

Turkey depends on imports for almost all of its energy needs, and Russia is its biggest gas supplier.

"Right now, we are selling below cost, and we are making serious efforts not to pass (higher costs) on to our citizens and industries," Yildiz said.

Turkey's $60 billion annual energy bill is the major driver of its ballooning current account deficit, the main vulnerability of its economy.

Russia and Turkey are set to discuss a series of energy issues including gas supply, gas price revisions and nuclear power, in the talks with Gazprom's Alexander Medvedev.

Officials said Russia's recent annexation of Crimea had created a risk for Turkey, noting that 12.5 percent of its gas supplies pass through Ukraine. Yildiz said steps to prevent a supply problem will be high on his agenda next week.

To meet rising demand in Turkey, Ankara also wants an increase in the capacity of the Blue Stream pipeline, which carries Russian gas to Turkey under the Black Sea, by around 3.5 billion cubic meters annually from 16 bcm currently.

A potential re-routing of Russia's South Stream pipeline will also be discussed after Turkey said it was open to the possibility of letting the controversial conduit pass through its territory if Moscow made such a request.

The massive South Stream project is seen as crucial for Russia's ambitions to cement its position as Europe's dominant gas supplier, but the venture has been thrown into doubt by tensions between Ukraine and Moscow.

"No request has been made yet. We will discuss all of these issues on Monday," Yildiz added. (Writing by Humeyra Pamuk; Editing by Crispian Balmer and Jaqne Baird)

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