June 22, 2012 / 5:32 PM / 5 years ago

UPDATE 1-France to regain access to Turkish energy industry

4 Min Read

* Minister says France welcome but some political positions still rankle

* Turkey cut ties over French bill on 1915 genocide

* Turkey says will keep taking in some Iran crude, payments legal (Adds Yildiz comments on resumption of French ties, settlement of payments for Iranian crude oil imports)

By Melissa Akin

ST PETERSBURG, June 22 (Reuters) - Turkey's resumption of diplomatic ties with France means French companies may regain some, if not full access to Turkey's energy sector, including its nuclear industry, Turkey's Energy Minister Taner Yildiz said on Friday.

After a meeting between Turkish Prime Minister Tayyip Erdogan and new French President Francois Hollande, Ankara announced on Thursday it would restore ties with France after a six-month hiatus in a dispute over the 1915 mass killing of Armenians by Ottoman Turks.

Ankara cancelled all economic, political and military meetings with Paris in December after France's lower house of parliament voted overwhelmingly in favour of a draft law to make it illegal to deny that the killings amounted to genocide.

France's highest court overturned the law two months later but the Turkish measures, which included restrictions on French military aircraft and ships landing or docking on its territory, have remained in place.

Yildiz said the government expected an improvement in relations with Hollande in power.

"I believe that this burden will be taken out or removed after the meeting (Hollande) had with his excellency Erdogan," Yildiz told reporters during an economic forum in St. Petersburg, Russia.

"As the energy sector we are ready for a variety of cooperation with France, although our projects and our business is really large and we can not separate them from the international politics," he said.

"Therefore we cannot ignore some political approaches that will affect our industry. I believe that from now on the prospects will be much better compared to the time of (Hollande's predecessor Nicolas) Sarkozy."

Armenia, backed by many historians and parliaments, says about 1.5 million Christian Armenians were killed in what is now eastern Turkey during World War One in a deliberate policy of genocide ordered by the Ottoman government.

Turkey says there was a heavy loss of life on both sides during the fighting in which Armenian partisans supported invading Russian forces.

Ties weakened during Sarkozy's term in office, when the former French president was also an outspoken opponent of Turkish membership in the European Union.

Iran Ties

Noting Turkey's relationship with Iran was "not like the relationship of any European countries with Iran," Yildiz said Turkey would continue to import some Iranian crude oil after its sole refiner cut imports of Iranian crude by 20 percent.

The EU itself has largely banned intake of Iranian crude from July 1. Iran's oil buyers around the world have been cutting imports to avoid U.S. financial sanctions which aim to stop Iran's nuclear programme through effective limits on dollar transactions.

Washington is pressing Turkey to cut Iranian supplies over the next six months or face sanctions, but the 20 percent cut has earned Ankara a 180-day exemption from financial sanctions, during which Halkbank can make payments for imports.

"The oil trade being done with Iran right now is not illegal. So trade operations are being implemented within all of those laws and regulations," Yildiz, said, adding it was able to pay for oil in Turkish lira.

He said the lost Iranian volumes would be replaced by Libyan and Saudi Arabian crude, which have been in greater supply through increased use of Saudi spare capacity and the recovery of the Libyan energy industry from a violent uprising which ousted Muammar Gaddafi. (Editing by James Jukwey)

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