* Tentative rapprochement raises hopes of energy ties
* Yildiz says too early to talk of deal
* Concern over extent of Turkish-Israeli rapprochement
(Adds details on relations with Israel, Iraq)
By Humeyra Pamuk
ANKARA, April 10 (Reuters) - A tentative rapprochement
between Turkey and Israel could eventually pave the way for
joint energy projects but it is still too early to talk of
specifics, Turkey's energy minister said on Wednesday.
A U.S.-brokered thaw between Turkey and Israel could alter
the energy equation in the eastern Mediterranean, in theory
allowing newly discovered Israeli gas to be piped to
import-dependent Turkey and on to other markets.
Israel, once energy poor, is expected to become a gas
exporter by the end of the decade. Its huge offshore Leviathan
field contains an estimated 17 trillion cubic feet (tcf) of gas,
making it the world's largest offshore discovery of the past
decade when it was found in 2010.
Seventeen 17 trillion cubic feet (481 billion cubic metres)
is equivalent to almost a year's worth of European gas demand
and enough to cover Israel's gas needs for generations.
U.S. President Barack Obama last month brokered a first step
in reconciliation between the two former allies, whose relations
were frozen after the 2010 killing by Israeli marines of nine
Turks aboard a Gaza-bound aid ship.
Israeli Prime Minister Benjamin Netanyahu apologised to his
Turkish counterpart Tayyip Erdogan over the killings and pledged
compensation to the bereaved, meeting a long-standing Turkish
demand. Turkey, for its part, appeared to back off a separate
demand that Israel stop blockading Gaza.
"The reason for Israel's apology was not energy projects.
But the consequence could be energy projects," Yildiz told
reporters at an energy conference in Ankara.
"We have said we are not closed to these in the future. But
at this stage ... it is early to talk about energy projects."
Because Israel's domestic energy market is so small, exports
are key to the development of the find. It would be cheaper to
export gas via a pipeline to Turkey than converting it to
liquefied natural gas to reach export markets by ship.
Turkey could become a large consumer of Israeli gas and
serve as a transit route to other export markets, but there are
concerns, behind the conciliatory rhetoric, about how quickly
Turkish-Israeli relations will be restored.
U.S. Secretary of State John Kerry urged the two nations to
restore full relations during a trip to Istanbul on Sunday,
saying such a move was vital to regional stability.
Despite Obama having pulled off a diplomatic coup - a
three-way telephone call with the Israeli and Turkish prime
ministers, who had not spoken since 2011 - some officials in
Washington are worried Turkey might be backtracking on the deal.
An Israeli delegation had been due in Turkey this week to
begin discussing details of the compensation agreement, but
Turkey postponed the meeting due to a foreign trip by a senior
government official who is involved in talks with Israel.
Neither country has said when their ambassadors would go
back, a prerequisite for the restoration of relations necessary
for bilateral energy talks.
Yildiz also said that Turkey wanted to see the Iraqi
constitution respected in any deals between energy firms and the
northern Iraqi Kurdistan region.
He told Reuters in an interview last week that he saw no
obstacles to public or private firms striking oil exploration
deals with Kurdistan and that Turkey would play an active role
in any arrangement under which crude export revenues are shared
between the central government and Kurdistan.
Yildiz added that Turkey's state oil company TPAO had
applied for exploration rights off the coast of Lebanon, which
shares a border with Israel. Israel and Lebanon have never
agreed upon a maritime border.
"For the field offshore Lebanon, several firms have applied
including TPAO. We're hoping to hear on the pre-qualification
results soon and we hope TPAO will be one of them," Yildiz said.
"TPAO will participate in the Lebanon (project)."
Dozens of companies have submitted pre-qualification bids to
explore for oil and gas in Lebanon's offshore waters.
Interest in drilling in the eastern Mediterranean has grown
since natural gas fields were discovered off Israel.
Names of the pre-qualified companies will be announced on
April 18 and the government aims to agree its first exploration
and production agreement by February next year.
(Writing by Nick Tattersall; editing by Ayla Jean Yackley and