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Turkey, Iran resolve to deepen energy ties

DUBAI: Looking eastward, Turkey has signalled that it would not allow financial difficulties to come in the way of strengthening energy ties with Iran. Turkey’s Foreign Minister Ali Babacan is slated to visit Iran later this month, Iran’s Press TV reported.

Seeking to deepen ties with its eastern neighbourhood, Turkey’s top diplomat is also expected to visit Syria, Iraq, Saudi Arabia and Jordan. Turkey is hosting a major conference on Iraq early next month.

On Wednesday, the Turkish Energy Ministry had declared that it would not be seeking foreign funding for its proposed $3.5 billions investment in Iran.

In July, Turkey and Iran had signed a Memorandum of Understanding entailing investments by the Turkish Petroleum Corporation (TPAO) in Iran’s giant South Pars gas field.

Out of the $3.5 billions that it plans to invest, Turkey would pitch in $2 billions for constructing a gas pipeline from Iran.

Turkey is positioning itself both as a destination for Iranian gas as well as a transit hub for exporting gas to Europe. Turkey’s pledge against seeking external funding comes in the wake of indications that international financial institutions are reluctant to fund big projects in Iran. According to the U.S. Iran Sanctions Act, any company investing more than $20 millions in Iran’s oil sector can be subjected to punitive measures.

By deciding to make huge investments in the Iranian oil and gas sector, the TPAO would also stand vulnerable to restrictions under the provision of U.S. law. Earlier, Turkey’s Prime Minister Recep Tayyip Erdogan had declared that Ankara was keen to develop a strong energy relationship with Iran and Russia.

The United States has stated its opposition to Turkey — a key NATO ally, signing energy deals with Iran.

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