* Ankara says Russia failed to sign agreement on price discount
* Project previously seen operational by 2017 faces delays
* Moscow wants construction permits for all phases of the project (Updates with more comments from officials, background)
By Orhan Coskun
ANKARA, July 30 (Reuters) - Negotiations with Russia on the TurkStream natural gas pipeline project have been suspended after Moscow failed to sign off on a key gas price discount agreement, Turkish officials told Reuters on Thursday.
Ankara obtained a 10.25 percent price discount on the 28-30 billion cubic metres (bcm) of gas it buys from Russia, Turkish Energy Minister Taner Yildiz said in February, but the discount, which should have been in effect as of January 2015, still needs a final signature.
Turkish officials have said another sticking point in talks has been Russia's insistence that Ankara grant permits for the construction work on four planned lines in the project. Turkey has so far only given licenses for the first line.
"Russia wants Turkey to say Yes on a number of issues that are way too complicated to be included as part of TurkStream negotiations. That will not be possible," said a Turkish energy official. "For Turkey, the signing of 10.25 percent discount that is already granted is key, and seen as Turkey's right."
Gazprom, the Russian partner in TurkStream, declined to comment. Russian energy minister Alexander Novak said on Wednesday the pipeline could be delayed if a related intergovernmental agreement is not signed soon.
During a visit by Russian President Vladimir Putin to Ankara last December, Russia said it was scrapping the South Stream pipeline project to supply gas to southern Europe without crossing Ukraine and named Turkey as its preferred partner for an alternative pipeline, with a promise of hefty discounts.
But with little progress on finalising the price agreement, state pipeline operator Botas could take Gazprom to the international arbitration court (ICC), as Ankara warned in late June.
"There are no decisions regarding the ICC right now, but if this final signature faces further delays, Turks can move rapidly on this," another Turkish official said.
Ankara already has a case with the ICC regarding a price dispute for gas it buys from Iran. Russia is Turkey's biggest natural gas supplier with the 28 bcm to 30 bcm gas it sells.
"(The) Russian side says they are waiting for a new Turkish government to be formed to put the final signature on the price deal," the second energy official said. "But the suspension of talks now will mean (the) Russian schedule for the project is no longer valid."
TurkStream is supposed to bring 63 bcm of gas per year to Turkey and to southern Europe via Greece by 2020. The first phase of pipeline was expected to be operational by 2017 and to carry 15.75 bcm of gas. (Additional reporting by Humeyra Pamuk in Istanbul and Denis Pinchuk in Moscow; writing by Humeyra Pamuk; editing by David Clarke)