July 23, 2010 / 12:31 PM / in 8 years

UPDATE 2-Iran, Turkish firm sign 1 bln euro gas link deal

* Iran ministry says 1 billion euro deal signed

* Turkish company Som Petrol says it signed with Iran

* Turkish minister says govt not involved

* Turkey says other talks on Iran gas field halted

(Adds quotes from Turkish partner)

By Parisa Hafezi and Orhan Coskun

TEHRAN/ANKARA, July 23 (Reuters) - Iran’s Oil Ministry said the country had signed a 1 billion euro ($1.3 billion) pipeline deal to take gas to Turkey and a Turkish firm called Som Petrol said it was the partner in the project.

“The one billion euro deal to build 660 km gas pipeline was signed on Thursday during the Iranian Oil Minister’s trip to Turkey,” the Iranian ministry said in a statement on Friday.

A senior Iranian official said Iran would pay a transit fee to export its gas to Europe using the pipeline crossing Turkey.

“The pipeline will enable Iran to export 50 to 60 million metres of gas per day ... It will be constructed within three years,” Javad Oji, head of the National Iranian Gas Export Co. (NIGC), told the Iranian Oil Ministry’s official website SHANA.

Oji was quoted by the Mehr news agency as also saying that 23 percent of the project would be handled by the Iranian side and 77 percent by the Turkish side.

One of the world’s biggest oil and gas producers, Iran has been hit by U.S. and U.N. sanctions that have hindered access to foreign investment and slowed its development as a major exporter. The website identified NIGC’s Turkish partner as ASB Co., but Som Petrol said it had signed the deal.

“We signed the agreement on the Iran-Turkey pipeline yesterday,” Som Petrol’s Chairman Sitki Ayan told Reuters.

“This agreement can be seen as continuation of a project that began in 2008.”

Iran and Turkey first agreed on a pipeline project in 2008 with the aim of carrying Iranian gas to Europe.

Ayan said the pipeline would carry 110 million cubic metres of gas per day and is planned to be completed in 2014.

The project is estimated to cost as much as 25 billion euros, he added.

Som Petrol already has operations in Turkmenistan and has been looking to expand business with Iran. A unit of Som Petrol had applied to the energy regulator EPDK for permission to purchase electricity from Iran, according to officials from the regulator.

Turkey’s Energy Minister Taner Yildiz said neither the Turkish government nor state pipeline concern Botas were involved in the deal with Iran, though several private firms had shown interest.

European Union foreign ministers will adopt tighter sanctions against Iran next week, including measures to block oil and gas investment and curtail its refining and natural gas capability, EU diplomats told Reuters on Tuesday.

Western countries suspect that Iran’s nuclear development work, which Tehran says is aimed at generating peaceful nuclear power, could be intended to produce weapons.

NO DEAL ON SOUTH PARS PROJECT

Yildiz added that Turkey’s talks concerning Iran’s giant South Pars gas project had failed to reach agreement over the marketing of the Iranian gas.

Turkey, which is bidding to join the EU, is heavily dependent on energy imports and Iran is its second-biggest supplier of gas after Russia. Iran exported 10 billion cubic metres of gas to Turkey last year.

Turkey and Iran have been aiming to expand their cooperation in energy, and Turkey had promised to invest $5.5 billion in developing production of 20-35 billion cubic metres of gas a year from Iran’s South Pars field. [ID:nnLDE65906N]

Turkey said in April Iran may export gas to Switzerland via Turkey in exchange for a transit fee. Iranian authorities have said Turkey would need to give its consent for the transit and the deal would then be signed with Switzerland.

A gas pipeline from Iran was hit by an explosion in eastern Turkey this week near the border. [ID:nLDE66K0TV]

To see a graphic from Botas on the pipeline link with Iran:

here (Additional reporting by Tulay Karadeniz and Selcuk Gokoluk in Ankara, Editing by Anthony Barker)

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