SOCHI, Russia (Reuters) - Russia and Turkey on Saturday agreed to work on extending a gas supply deal and discussed switching to payments in national currencies at a meeting between prime ministers Vladimir Putin and Tayyip Erdogan.
Erdogan visited Putin in the Black Sea resort of Sochi one day after Putin and Italian Prime Minister Silvio Berlusconi oversaw the signing of deals with Russia's partners in the South Stream gas pipeline project.
Turkey, the third largest consumer of Russian gas after Germany and Italy, participates in the rival Nabucco project that will eventually carry about 30 billion cubic meters of gas to meet about 5 percent of European demand.
"The agreement on gas supplies through the so called Western route signed in 1986 is expiring in 2012. We have agreed today to immediately start work to prolong this agreement," Erdogan told a news conference after three-hour talks with Putin, referring to gas supplies through Bulgaria.
Erdogan said the two sides discussed the possibility of switching to national currencies in bilateral trade. Russia is Turkey's largest trading partner, while Turkey is the fifth largest trading partner for Russia.
"We also discussed one issue which I consider very important, the possibility of mutual payments in national currencies. I think such a move is in both countries' interests as it will allow us to eliminate currency risks," Erdogan said.
Russia and other emerging economies have been pushing for debate on the dollar's role as the world's primary unit of foreign exchange.
Erdogan said Russia and Turkey will also continue work on their underwater Blue Stream pipeline project, which supplies just under half of Russian gas to Turkey.
Putin said construction of the second Blue Stream gas pipeline has become a priority for both countries.
Erdogan said Turkey will announce "within days" the results of the tender to build a nuclear power station in Turkey in which Russian firm Atomstroiexport is the sole bidder.
Reporting by Gleb Bryanski; Editing by Ruth Pitchford