Azernews.Az

TEHRAN - Iran and Turkey signed a 1 billion euro ($1.29 billion) contract to build a pipeline that will transfer the Islamic state's natural gas to Turkey, a statement by the Iranian Oil Ministry said on Friday, Reuters reported.

"The one billion-euro deal to build a 660-kilometre gas pipeline was signed on Thursday during the Iranian Oil Minister's trip to Turkey," the statement said.

The contract on the construction of the cross-Turkey pipeline was signed between National Iranian Gas Export Company (NIGC) and Turkey's Som Petrol Company (ASB).

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 cubic metres of gas per day ... It will be constructed within three years," NIGC head Javad Oji told the Iranian Oil Ministry's official website SHANA.

The Iranian Oil Ministry statement also said there were talks on exporting Iran's natural gas to Europe via Turkey and other energy-related issues.

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

One of the world's biggest oil and gas producers, Iran has been hit by US and UN 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, 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 in 2008 to work out a deal to carry Iran's natural 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.

Iran currently exports 25 million cubic meters of natural gas to Turkey per day and the figure could be increased to 30 million cubic meters a day.

Iran and Turkey have boosted economic ties and cooperation in various fields in recent years, but the two countries have hiked their energy ties in a very specific and remarkable manner.

Turkey has made large investments in Iran's giant South Pars Gas Field in the last two years, while the two sides are currently working on several other giant energy projects.

Oil exports payment excludes euros, dollars
Iran will switch to currencies other than euros and dollars for payment of its oil exports, a senior Iranian official was quoted yesterday as saying by the semi-official Mehr news agency.

"We are free to choose any currency for our oil sell and this issue depends on Iran's interests... the important issue is to exclude euros and dollars," said first Vice-President Mohammad Reza Rahimi.

"We will shift from euros and dollars to any other currency." New sanctions imposed by the UN and the US on Iran put more curbs on its banking and financing system that may block transactions for Iran.