UPDATE 3-Turkey in $4 bln submarines deal with HDW

(Adds details, background)

ANKARA, July 22 (Reuters) - NATO member Turkey said on Tuesday it will order six new U-214 class submarines from Germany's HDW TKAG.F in a deal worth around 2.5 billion euros ($4 billion) as part of an upgrade of its navy.

The contract was won by HDW/MFI, a joint venture between Thyssen Krupp’s HDW unit and UK-based Marine Force International LLP, but the non-nuclear vessels will be built in the Golcuk Naval Shipyard in Turkey.

Defence Minister Vecdi Gonul told reporters the first of the submarines would be delivered in 2015.

The two other bidders for the contract were France's DCNS, which is 25-percent owned by defence electronics company Thales TCFP.PA, and the Spanish government shipbuilder Navantia SA.

“The submarine purchase project will cost around 2.5 billion euros,” Gonul said after a meeting of a defence industry committee.

The size of MFI’s part of the deal was not immediately clear, although a large part of the deal was from HDW.

Gonul said Turkish industrial participation in the project would be worth around 80 percent of the total value of the deal. Around 20 of the systems and sub-systems of the U-214 will be produced by Turkish industry, he said.

A Turkish defence ministry official said around 15 percent of the project would be paid in advance.

Turkey has the second biggest army in NATO after the United States and is currently modernising its military. It is expected to place large procurement orders in coming years. (Writing by Paul de Bendern; Editing by David Cowell)