LONDON, Jan 8 (Reuters) -Turkeyis turning to its owncoal, worried about dependence on pricier gas fromIranandRussia, after a deal with a UAE company which will boost its coal-fired power capacity by two thirds.Its biggest gas supplier is Russia's Gazprom, which accounts for around half of imports, but it is long-term supply fromIranthat could pose the biggest concerns. Turkey might not be able to continue to ignore further tightening of international sanctions aimed at curtailing the Islamic Republic's nuclear programme.
Gas imports have also been disrupted as a result of attacks on Iranian and Azeri import pipelines by Kurdish separatists.
"In public, Turkey has tried to show it won't bow to U.S. pressure, but even if can still buy Iranian gas, it's unlikely to be able to increase imports from a country that is subject to strict embargoes," said Alex Jackson, ananalystwith political risk consultants Menas Associates.
Iran supplies around 16 percent of Turkey's gas needs, followed by 15 percent from Azerbaijan, according to International Energy Agency (IEA) figures.
Ankara has signed a $12 billion deal with Abu Dhabi's TAQA to mine lignite coal and build up to 8,000 megawatt (MW) of new power plants by 2020.
"The TAQA deal is first and foremost motivated by the need to refurbish and build new coal-fired power plants, but the move to develop coal stems from a general concern that Turkey is hugely dependent on others for its energy needs," said Andrew Neff, a senior analyst with IHS Energy.
The European Association for Coal and Lignite (Euracoal) says that Turkey imports over 70 percent of its primary energy needs. Most of its 30 million tonnes annual hard-coal use is supplied byRussia, Colombia, the United States and South Africa, according to Euracoal.
Natural gasimports, mainly from Russia, Iran, and Azerbaijan, meet around 45 percent of Turkey's demand for heat and power, according to the IEA, a dependency which comes with frequent price disputes withsuppliers.
In another sign that Turkey's policy makers are keen to reduce dependence on gas imports, the government said in December that it would not take part in Russia's South Stream gas pipeline project.
The pipeline aims to pump over 60 billion cubic metres, almost twice Turkey's annual gas demand, via the Black Sea into southern Europe.
High gas prices that make gas-fired power generation less attractive than coal, as well as concerns over gas import dependency, have been shared by several European countries.
Consuming countries complain that Gazprom charges too much for its gas and that its long-term supply contracts are too inflexible, and the European Union opened an antitrust case against Gazprom last year, sparking a political row with Moscow.
InGermany, cheap coal prices have led to a strong growth in coal-fired power generation.
In Poland, which heavily relies on Russian gas supplies but which is also a big user of the more polluting lignite coal which Turkey mines, the government is eying potentially large domestic supplies of unconventionalnatural gassources, such as shale gas.
Ukraine said last month that it secured a $3.6 billion loan fromChinathat will switch power plants from using imported natural gas to gasified coal.
Despite Turkey's long-term aim of becoming less reliant on imports, its demand for Russian gas in the short-term will likely rise in order to meet booming demand, said IHS Energy's Neff.
A fast-growing population means that Turkey is likely to overtake Britain as Europe's third-biggest electricity consumer within a decade.
By Reuters
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