Turkey to reject company's bid to import Iraq gas-officials

Fri Nov 9, 2012 9:35am EST

* Ankara and Baghdad at odds over fugitive vice president

* Baghdad and Iraqi Kurdistan also at odds

* Turkey aims to increase involvement in Iraq energy sector

By Evrim Ergin and Ozge Ozbilgin

ISTANBUL/ANKARA, Nov 9 (Reuters) - Turkey is set to reject a company's application to import natural gas from northern Iraq after it failed to produce the necessary purchase agreement in time because of political tensions, energy officials told Reuters.

Turkish company Siyahkalem Ltd had applied to energy markets watchdog EPDK to import gas between 2014-2033, starting with annual volume of 700 million cubic metres and rising to 3.2 bcm.

The firm had to deliver a purchase agreement to the regulator within 90 days after the EPDK initially ruled that its application was acceptable, but it failed to do so, the officials said.

"The political developments being experienced between Turkey and Iraq and between the central Iraqi government and the Northern Iraqi Kurdish government had an impact in the failure to secure the agreement," one of the Turkish energy officials said.

Turkey has been developing its interest in the Iraqi energy sector, despite tensions with Baghdad after Ankara gave refuge to Iraq's fugitive vice president, Tareq al-Hashemi, who has been sentenced to death by an Iraqi court.

Iraq has also asked Turkey to stop attacks on Kurdish rebel forces sheltering across the border in northern Iraq, a Kurdish autonomous region over which Baghdad has little control and with which Ankara has forged close ties in recent years.

Iraq's cabinet said on Wednesday it was expelling Turkey's state-owned TPAO from its exploration block 9 oilfield for an unspecified reason, although denying it was prompted by any move by the Turkish company into Kurdistan.

According to regulations on obtaining a natural gas import licence in Turkey, companies have to present a contract from the supplier country and company to prove that the resource will be transferred.

Sources close to Siyahkalem said the firm had asked for additional time from the regulator but that the regulator had not responded yet and the process was continuing.

(Writing by Daren Butler and Seda Sezer)

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