* Turkey to continue power projects with Iran -minister
* Iran gas pipeline to feed European demand
(Refiles story published Aug. 11 to clarify that comments in paragraph 7 come from an unidentified source at Tupras and are not official company policy)
By Orhan Coskun
ANKARA, Aug 11 (Reuters) - Turkey will support petrol sales by Turkish companies to Iran, Energy Minister Taner Yildiz told Reuters on Wednesday, despite U.S. sanctions that aim to squeeze the Islamic Republic's fuel imports.
The pledge came ahead of an expected resumption of talks next month between world powers and Tehran on the Iranian nuclear programme, which Washington suspects aims to develop atomic weapons.
"If the preference of the private sector is to sell these (petroleum) products to Iran, we will help them. There is no demand for Turkey to halt the trade of these products with Iran," Yildiz said in an interview.
The sale of petrol, as well as other projects Turkey is planning with Iran, may indicate a shift in its energy policy to give priority to its energy-rich neighbours in the Middle East over conditions set by its traditional Western allies.
Any firms that sell gasoline to Iran could face retribution including a possible ban from accessing the U.S. financial system or denial of U.S. contracts, according to a document from the U.S. Treasury.
A source at Tupras who did not want to be identified said, "For us, Iran is more important than America, because we get crude oil from them. We don't get anything from America."
The refiner buys 33 percent of its crude from the Islamic Republic.
Although Iran is the world's fifth-largest crude exporter, it has to import around 40 percent of its gasoline needs because it does not have enough domestic refining capacity.
Yildiz said plans by Turkey and Iran for joint construction of power plants with a total capacity of 6,000 megawatts would continue, giving the two countries enough capacity to feed their own markets as well as other countries in the Middle East.
A planned natural gas pipeline from the Islamic Republic to Turkey by private Turkish company SOM Petrol will be used to supply European gas markets as well Turkey's demands, the minister said.
Turkey, which is a NATO member and European Union member candidate, has seen its capital rise sharply in the Muslim Middle East since Ankara's vocal condemnation of the killings of nine pro-Palestinian activists aboard a Gaza-bound aide ship.
Ankara has recently drawn closer to Tehran. Together with Brazil, it brokered a nuclear fuel swap in May in the hopes that the deal would draw Iran and major powers back to the negotiating table.
Iran, which says its nuclear programme is for peaceful purposes, gave an assurance that it would stop enriching uranium to 20 percent purity if world powers agreed to the proposed swap, but their response was lukewarm.
Since June, the U.N. Security Council, the United States, and the European Union have imposed additional sanctions that have increased the pressure on Tehran.
Turkey's gasoline sales to Iran dropped 73 percent in July to $25.55 million as the sanctions came into force. Sales were the equivalent of one cargo, according to Reuters calculations. [ID:nLDE6791OT].
Russian oil giant LUKOIL (LKOH.MM) has also resumed gasoline sales into Iran in partnership with China's state-run firm Zhuhai Zhenrong. [ID:nLDE67A17G]. (Additional reporting by Thomas Grove, editing by Jane Baird)