Prime Minister Vladimir Putin held energy talks with his Turkish counterpart Recep Tayyip Erdogan on Saturday, as Russia seeks to expand cooperation with its neighbor.

Gazprom will soon begin talks on extending a delivery contract that expires in 2011, Putin told reporters after a lunch meeting with Erdogan at his Sochi residence.

The two countries will also consider building a second branch of the Blue Stream pipeline that links Russia to Turkey under the Black Sea, Putin said.

Erdogan took the occasion to thank Russia for delivering extra gas during the winter when other suppliers cut short their deliveries.

"Russia has never let Turkey down with gas supplies. When we experience difficulties, Russia always comes to our aid and increases the necessary volumes," he said, Interfax reported.

Putin invited Erdogan after Turkey last week said it would reach an agreement with the European Union on the Nabucco pipeline, a project that would bypass Russia in bringing Caspian resources to Europe.

Gazprom, which is pushing a rival project called South Stream, is seeking to thwart Nabucco by buying up all excess gas volumes produced by neighbors such as Azerbaijan and Turkmenistan.

Turkey is Gazprom's fourth-largest customer by volume, receiving Russian gas via Bulgaria and Blue Stream. Russia delivered 23.8 billion cubic meters of gas in 2008, 10 bcm of which is delivered through Blue Stream. This year, the countries expect that figure to increase to 25.5 bcm.

The countries agreed in March on the creation of a working group for the Blue Stream project, which Russia hopes will enable it to deliver gas to the Middle East.

(Bloomberg, MT)