Turkey's Botas Files for Arbitration over Natural Gas Prices from Gazprom

Turkey's state-owned gas importer Botas has appealed to arbitration court after gas price discount talks with Russia's OAO Gazprom have stalled. In January, Botas has requested to re-negotiate a gas price change for its imports from Gazprom via the Blue Stream and West Stream gas pipelines. Ankara has the right to open negotiations on January 1, 2015.

According to a statement from Turkish Energy Ministry, Botas and Gazprom had agreed for early talks for discuss a price decrease, but Gazprom did not send necessary filings to begin talks. Botas has requested the necessary documents in early October, but has not received any response from Gazprom.

Russian President Vladimir Putin has promised a 10% price discount to Botas, which buys about two thirds of Russian gas supplied to the country, prior to talks on the Turk Stream pipeline being halted in the summer. The proposed Turk Stream Pipeline will ship Russian gas under the Black Sea to Turkey's western borders, bypassing Ukraine.

Turkey depends on imports for almost all of its energy needs, and Russia is its biggest gas supplier. Turkey's $60 billion annual energy bill is the major driver of its current account deficit, the main vulnerability of its economy.

Russia sells 16 bcm gas a year via the Blue Stream pipeline, a 25-year contract which ends in 2022, and 14 bcm a year via West Stream pipeline, a 23-year contract which ends in 2021. Turkey is the second-largest foreign market for Gazprom after Germany with about $10 billion in revenue last year.