Turkey needs Iranian gas to fuel its rapidly growing energy demand, a Turkish energy executive said Wednesday following U.S. calls on Ankara to cut business ties with Tehran, Fars News Agency reported.

Turkey's recently said it wants to strengthen energy cooperation with neighbor Iran and invest $3.5 billion in its South Pars gas field starting next year.

"We cannot disregard Iran only for political reasons," Huseyin Saltuk Duzyol, general manager and chairman of the board of Turkish state-controlled pipeline company Botas, said.

"We need Iran from a commercial point of view," Duzyol told reporters on the sidelines of an energy conference in Milan, Italy.

Turkey needs Iran's gas reserves, the second-biggest in the world after Russia's, for its domestic consumption, which is expected to grow 15 percent a year, Duzyol said. Tehran is already Turkey's second-biggest supplier of natural gas after Moscow.

The two sides continue to hold talks to boost energy ties, and technical experts have been preparing a binding agreement after preliminary power and natural gas deals were struck last month, Duzyol said.

Sinopec to sell bonds to generate revenue

China Petroleum & Chemical Corp. (NYSE:SNP), or Sinopec, seeks to generate revenue by selling bonds and warrants to fund new projects and repay loans.

The six-year bonds would be sold at par with a face value of $13.30 each and at least 60 percent initially would be set aside for existing shareholders, Sinopec was cited as saying in local news reports.

The deal, the largest bond sale by the company, requires approval from the China Securities Regulatory Commission, the company said.

Listed mainland firms are tapping the recently reformed corporate bond market as a new funding channel. Other major mainland companies preparing bond sales include China Vanke and China Yangtze Power. Wumart Stores, which runs supermarkets in Beijing, also said Thursday that it planned to sell 1 billion yuan of corporate bonds to fund expansion and repay debts.

The China Securities Regulatory Commission scrapped some restrictions such as the quota system and bank guarantees when it took over regulatory power from the National Development and Reform Commission on corporate bond sales by listed firms last month.

Sinopec plans to use the money raised from the bond sale to partly fund the Sichuan-to-East China Gas project, the combined projects in Tianjin and Zhenhai, and to repay bank loans.

Sakhalin-2 faces construction problems under Gazprom

Sakhalin-2 will not begin exporting oil and gas from the new terminals until the first half of next year due to construction and commissioning delays on Russia's largest offshore project.

The Gazprom-led Sakhalin Energy Investment Co. continues to build and commission the oil and gas pipelines that run along the length of the east Russian island, but construction has been more complex than anticipated.

The consortium, which includes Shell, Mitsui and Mitsubishi, has installed two new platforms and built two export terminals and offshore pipelines as part of the Sakhalin II project.

Sakhalin Energy said oil exports from the new terminal in Aniva Bay will not begin until next year, and exports from a new liquefied natural gas plant will follow in the fourth quarter of 2008.

"We continue to make good progress on key milestones. This year we have installed the PA-B platform, completed the offshore pipelines and imported our first LNG cargo for commissioning the plant," Sakhalin Energy said.

"It is not possible to be precise as to when the start-up of full production will happen. It depends on completion and testing of the facilities. We will start year-round oil shipments in the first half of 2008 and produce LNG in late second half 2008," the company said.

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Closing oil prices, Sept. 28, 3 p.m. London

Brent crude oil: $83.11

West Texas Intermediate crude oil: $85.13

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(e-mail: energy@upi.com)