Russia Allows Turkey Not To Pay For Gas Until 2024

Erdogan has secured concessions from the Kremlin.

Turkey, which has become Gazprom's biggest client and one of the main hubs for circumventing sanctions against Russia, has secured gas concessions from the Kremlin, The Moscow Times reports.

An agreement has been reached with Gazprom that will allow Turkey not to make some of its gas payments and postpone them to a later date, the country's Energy and Natural Resources Minister Fatih Donmez said.

"Last year, after a sharp increase in gas prices, we negotiated with Gazprom to postpone some payments and an agreement was reached," he said, adding that the indulgences would affect the "payment cycle" coordinated with the Turkish Finance Ministry and Treasury.

The minister did not specify the total amount of the "deferral". He dismissed rumors that it was a gigantic $20 billion as untrue.

According to Bloomberg, it was a deferral until 2024 sought by the Turkish national gas company Boru Hatlari ile Petrol Tasima AS (BOTAŞ). During a meeting in Sochi in August last year, Turkish President Recep Erdogan personally asked Russian President Vladimir Putin for a gas concession.

He insisted on a discount from Gazprom, whose gas was becoming unaffordable for the fragile Turkish economy: domestic inflation surpassed 80% last year, while the current account deficit set a historic high of $48.7 billion last year and $14.24 billion in January this year.

Deputy Prime Minister Aleksandr Novak said after the summit in August that an agreement had been reached to partially convert Turkey's payments into roubles. However, Erdogan demanded more: at the SCO summit in Samarkand in September, he asked to reduce Gazprom's prices by 25 percent. The possibility of transferring part of the payments was seen as an alternative to a discount.

As a favour in return, Putin suggested that Erdogan create a gas hub in Turkey to replace the blast-damaged Nord Stream pipeline system for supplies to Europe.

In March, Çağrı Erhan, a member of the Turkish president's Security and Foreign Policy Council, said talks on the hub had been suspended. "Right now we don't have the money to build it. If Russia has money, let it start building the hub. Everything depends on investment," he explained.