(Adds U.S. reaction)
By Orhan Coskun
ANKARA Oct 3 Turkey will finance a $3.5 billion
investment in Iranian gas production entirely from a state
company of its own as U.S. opposition has put off foreign
investors, Energy Ministry officials said on Wednesday.
The United States has objected to a gas agreement between
its NATO ally Turkey and the Islamic republic, and is urging
countries to cut business ties with Iran over its failure to
suspend its nuclear energy programme.
Washington is spearheading a drive for a third sanctions
resolution against Iran in the UN Security Council.
It also plans new unilateral actions as a means to pressure
Tehran over its nuclear programme which Washington says is aimed
at building a bomb and Iran says is for peaceful purposes.
The senior Turkish energy officials, who declined to be
named, told Reuters the Turkish Petroleum Corporation (TPAO)
will start investing in Iran's South Pars gas field project as
soon as a comprehensive agreement was signed in the second half
Ankara and Tehran signed a memorandum of understanding in
"Turkey can completely cover the necessary amount for the
investment," one of the officials told Reuters. The official
said TPAO had not sought credit from foreign institutions, given
their unwillingness to finance projects linked to Iran.
In Washington, State Department spokesman Sean McCormack
said he was not aware of the planned $3.5 billion investment by
TPAO but he reiterated U.S. opposition to such a move.
"In principle, we don't think it is the right time to be
investing in the Iranian oil and gas sector given the questions
surrounding the activities of the Iranian government pursuing
weapons of mass destruction and also being the most significant
state sponsor of terrorism," McCormack said.
TURKEY RESISTING PRESSURE
Turkish Prime Minister Tayyip Erdogan has defended his
government's deal with Iran, saying no country can ask Ankara to
give up the relationships it has with energy suppliers.
McCormack said often these deals were just an announcement
of an intent to possibly invest at a later time in Iran and he
wanted to know more details.
"I can't tell you where they are in this process but the
Iranians like to have a lot of these announcements as a way to
build the perception that all is well and normal with respect to
Iran," said McCormack.
Washington has suggested Turkey, which is almost entirely
dependent on energy imports, seek alternatives to Iran.
Iran is Turkey's second largest natural gas supplier after
Turkey, which is seeking European Union membership, is one
of the few countries in Europe increasing energy cooperation
with Iran during the heightened tensions.
European officials say new EU investment in the Islamic
republic is already dwindling because of the political risk and
lack of finance for major projects, while exports to Iran are
falling as governments and banks cut back trade credits.
Iran rejects Western accusations it is seeking to develop
nuclear weapons, saying its atomic programme is solely aimed at
generating electricity so it can export more oil and gas.
The U.S. Iran Sanctions Act of 1999 says that if any foreign
company invests more than $20 million in Iran's gas and oil
sector it is subject to U.S. sanctions.
The Turkish energy ministry officials told Reuters TPAO was
also interested in investing in Iran's oil sector after the
October agreement was signed.
Every year TPAO invests some $1 billion in projects abroad,
one official said.
(Additional reporting by Washington bureau)