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Russia, Turkey Agree on $25 Billion of Nuclear, Oil Projects

May 12 (Bloomberg) -- Russia agreed on $25 billion of mostly energy projects with Turkey, including the nation’s first nuclear power plant, while seeking to expand the countries’ roles in global energy markets.

President Dmitry Medvedev oversaw the signing of 17 agreements with Turkey, also covering grain supplies and tourism, after meetings today with his Turkish counterpart Abdullah Gul and Prime Minister Recep Tayyip Erdogan in Ankara. The countries aim to triple trade to $100 billion in five years, Medvedev said.

Russia plans to build Turkey’s first nuclear power plant, with four reactors, at a cost of about $20 billion after more than a year of negotiations, as it taps global demand for non-fossil fuels. The world’s biggest energy producer, Russia also aims to expand oil and gas pipelines across Turkey, as that country seeks to bolster its role as a hub for fuel shipments.

“This will be the first case in which Russia not only builds a power plant, as we have in Iran and India, but will also own it,” Sergei Kiriyenko, head of Russian state nuclear holding company Rosatom Corp., told reporters in the Turkish capital.

Construction of the plant on the country’s southern coast will take seven years, Erdogan said. Turkish authorities delayed awarding the contract since a tender in September 2008 because Russia had submitted the only bid. ZAO Atomstroyexport, Russia’s reactor builder, led a group of companies seeking the contract.

Nuclear Power Plant Sale

Atomstroyexport may later sell as much as 49 percent to in the plant to investors, Kiriyenko said, declining to name potential buyers. “Turkish investors are interested. We’re also holding talks with European investors.”

Turkey won’t have to pay anything up front, Kiriyenko said. Russia will recoup costs through guaranteed electricity sales at a fixed price, he said.

Russia plans to participate in the Samsun-Ceyhan oil pipeline, planned by Eni SpA and Turkey’s Calik Holdings AS to bypass tanker delays in the Bosporus and Dardanelles, Medvedev said. The project may cost $3 billion, Russian Deputy Prime Minister Igor Sechin told reporters.

An energy security agreement signed today makes the oil pipeline from Turkey’s Black Sea port of Samsun to its Mediterranean export hub at Ceyhan a priority, Erdogan said.

“We will actively develop the Samsun-Ceyhan oil pipeline, with the possible construction of a refinery and joint sales of oil products,” Medvedev said today.

The oil link, and Russia’s planned expansion of gas pipeline projects, will increase Turkey’s importance as a resource hub, Erdogan said. Russia will provide 70 percent of the country’s oil and gas when the links are completed, he said.

Russia and Turkey also agreed to eliminate visas for each other’s citizens to encourage business and tourism, Medvedev said.

To contact the reporter on this story: Ilya Khrennikov in Ankara at ikhrennikov@bloomberg.net

To contact the editor responsible for this story: Simon Casey at scasey4@bloomberg.net

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