Russia Said Likely to Halt Turkey Gas-Link Talks Over Jet

  • Work of Russia-Turkey intergovernmental commission suspended
  • Current gas supplies to Turkey not affected, Interfax reports

Russia is preparing to halt talks with Turkey on a gas link President Vladimir Putin proposed last year as part of retaliatory measures for the downing of one of its warplanes near the Syrian border, according to a government official in Moscow.

Russia published a decree on Tuesday banning some Turkish food imports, curbing travel to the country and suspending the work of an intergovernmental commission in charge of the link. That means the talks would likely be halted, the official with direct knowledge of the matter said, asking not to be identified as the information isn’t public.

The measures are part of Putin’s push to retaliate against the shooting down of the jet by Turkey’s military last week, the most serious incident between Russia and a North Atlantic Treaty Organization member since the Cold War. Russia’s current gas supplies to Turkey, which brought in revenue of $10 billion last year, aren’t included in the restrictions, Interfax reported, citing a person it didn’t identify.

“The cancellation of Turkish Stream could be good news for Gazprom shareholders,” Maxim Moshkov, an energy analyst at UBS Group AG in Moscow, said by phone Tuesday. “Gazprom may save up to $20 billion on this project.”

Major Projects

The suspension of the commission doesn’t automatically end all talks on Turkish Stream, or on a nuclear power plant Russia may build in Turkey, Interfax reported, citing Economy Minister Alexei Ulyukayev. There’s no final decision yet on the major projects between the two countries, he was cited as saying. Last week, Ulyukayev said Turkish Stream may fall under retaliatory measures.

Last December, Putin offered to make Turkey a new linchpin in Europe’s energy supplies by 2020. He proposed to build a Black Sea gas pipeline to supply Turkey and the European Union, which relies on Russian gas for about 30 percent of its needs, amid political tensions with the 28-nation bloc.

Talks on the pipeline stalled over the summer as the parties couldn’t agree on gas prices and Turkey failed to form a government after June elections. Russia’s military build-up in Syria contributed to tensions. In October, Gazprom PJSC said it cut the link’s planned capacity by half.

The Russian Energy Ministry and Gazprom declined to comment on the stalled talks. Gas supplies to Turkey are proceeding in line with the contract, Russian Deputy Energy Minister Anatoly Yanovsky said last week.

Turkey, which relies on Russian gas for about half its needs, doesn’t think its neighbor will cut the fuel supplies, Prime Minister Ahmet Davutoglu said Tuesday in an interview with Haberturk TV, adding he believed the sanctions will backfire.

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