UPDATE 1-Iran reports Turkey gas deal, Ankara stands back

Fri Jul 23, 2010 1:28pm BST

* 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 Iran official's quotes, Turkish reaction)

TEHRAN, 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, while Ankara denied the Turkish state was involved and a firm called Som Petrol said it was the partner.

"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 oil ministry said in a statement.

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

"The deal was signed between National Iranian Gas Export Co. and Turkey's ASB Co.," Javad Oji, head of the NIGC, told the Iranian Oil Ministry's official website SHANA.

"The pipeline will enable Iran to export 50 to 60 million metres of gas per day ... It will be constructed within three years."

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.

Turkey's Energy Minister Taner Yildiz said neither the Turkish government nor the state pipeline concern Botas had signed such a deal with Iran.

"Neither the government of Turkey nor Botas are involved in the 1 billion euro pipeline deal with Iran. Several private firms are known to be interested in a pipeline (with Iran)," Yildiz said.

Yildiz added that Turkey's talks concerning Iran's giant South Pars gas project had also failed to result in an agreement and had been cancelled.

SOM PETROL

In Ankara, Turkish energy firm Som Petrol's Chairman Sitki Ayan said on Friday his company signed a 1 billion euro ($1.29 billion) pipeline deal with the Iranian National Gas Company.

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

Turkey 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]

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

Turkey said in April Iran may export gas to Switzerland via Turkey in exchange for a transit fee to Ankara if it does so.

Iranian authorities have said Turkey would need to give its consent for the transit and the deal would then be signed with Switzerland.

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.

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

here

(Writing by Parisa Hafezi, additional reporting by Tulay Karadeniz, Orhan Coskun and Selcuk Gokoluk in Ankara, Editing by Anthony Barker and Sue Thomas)

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