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ISTANBUL, May 26 (Reuters) - Turkey and Russia have reached a retroactive agreement for a 10.25 percent discount on the natural gas Ankara buys from Moscow, Turkish President Tayyip Erdogan said on Saturday.
Speaking at an election rally in eastern Turkey's Erzurum, Erdogan said a $1 billion payment will be made to Turkey under the deal, which followed a Turkish request for a discount on gas first made in 2015.
Turkey had gone to arbitration after its request was not met, Erdogan said.
"After long talks, we reached agreement on a 10.25 percent price discount on the natural gas we receive from Russia, covering the years 2015 and 2016," he said.
"With the agreement which we have reached, a payment of $1 billion will be made to our country to cover the discount for the natural gas we received in those two years," he added.
Turkey is the biggest consumer of Russian gas after Germany. Russia's Gazprom, which has a de facto monopoly on Russian gas exports by pipeline, supplies gas to Turkey's Black Sea coast via an underwater pipeline called Blue Stream with a capacity of 16 bcm per year.
Gazprom did not respond to a request for comment. (Reporting by Daren Butler; additional reporting by Maria Kiselyova; Editing by David Dolan and Toby Chopra)