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Russia's Putin in energy talks with Turkey

ANKARA (Reuters) - Talks expected to boost Ankara’s energy hub ambitions began on Thursday as Russian Prime Minister Vladimir Putin met with Turkish Prime Minister Tayyip Erdogan.

Russian Prime Minister Vladimir Putin (L) is seen with his Turkish counterpart Tayyip Erdogan during a meeting in Ankara August 6, 2009. REUTERS/Kayhan Ozer/Pool

Putin’s visit is also expected to focus on Turkish support for a Russian natural gas pipeline project that Moscow wants to build ahead of a rival European Union-backed pipeline.

Russia, which supplies a quarter of Europe’s natural gas, wants to accelerate construction of gas supply routes to bypass Ukraine and other ex-Soviet states after rowing with Kiev over transit payments several times in recent years.

Turkish support for the Kremlin-backed project, would ensure both delivery and supplies of Russian gas. That is a promise which the rival EU-backed Nabucco project, which is still searching for gas supplies, has yet to deliver.

Ties between Turkey and Russia represent nearly $40 billion in mutual trade, while Moscow supplies Turkey with two thirds of its natural gas.

Analysts say the agreements being signed on Thursday reflect EU-member candidate Turkey’s greater political ambitions within the region, expanding beyond its traditional Western allies.

The agreement would mark a new victory for Russia in its fight to undermine the construction of the Nabucco pipeline. Had Turkey rejected the South Stream project, Russia would have been forced to go through Ukraine’s territorial waters.

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In July, Turkey and four EU countries signed a transit agreement for the Nabucco project, which Turkey has used to gain leverage in its EU membership talks.

“The (South Stream) talks coming so soon after signing of Nabucco shows Turkey is willing to continue playing on all possible fronts to become an energy hub and to become a strategically important player in the region,” said Eurasia Group analyst Wolfango Piccoli.

Putin flew into the Turkish capital on Thursday morning. Italian Prime Minister Silvio Berlusconi was to join the talks later in the day to emphasize Italy’s support for the South Stream project, conceived by Russia and Italian ENI.

Shares in ENI were trading up 1.63 percent at 6:13 a.m. EDT.

ENERGY HUB

In exchange for Ankara’s participation in the project, Moscow is expected to give its support for several Turkish energy projects including an oil pipeline planned to run from the Black Sea town of Samsun to the Mediterranean oil hub of Ceyhan.

“These are projects for Turkey that bring it closer to being the hub it wants to be; every project we are involved in adds something,” said a senior Turkish government source.

Austrian firm OMV said on Wednesday it planned to make Turkey its third base for energy operations because of its strategic location between Caspian and Middle East energy reserves and European consumers.

Ankara has said it expects further Russian cooperation to help Turkey build its first nuclear power station. A consortium of Russian Inter RAO, Atomstroiexport and Turkish Park Teknik submitted the only bid in last year’s tender.

Turkey has delayed final approval of the bid. Turkey’s energy minister said on Wednesday he expected the Russian firms to lower the price for electricity from the power station.

Reporting by Orhan Coskun and Gleb Bryanski; writing by Thomas Grove; editing by James Jukwey

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