TEHRAN (Fars News Agency) - Turkey's planned $3.5 billion investment in Iran's South Pars gas field will use capital from state energy company TPAO, senior officials at Turkey's Energy Ministry said on Wednesday.

The officials, who declined to be named, also said Turkish Petroleum Corporation (TPAO) would start investing in the project as soon as a comprehensive agreement was signed in the second half of October. Ankara and Tehran signed a memorandum of understanding in July.

"Turkey can completely cover the necessary amount for the investment," one of the officials told Reuters.

The United States has objected to a gas agreement between its NATO ally Turkey and the Islamic republic, but Turkey's prime minister has said no country can ask Ankara to give up the relationships it has with energy suppliers.

Washington has suggested Turkey, which is almost entirely dependent on energy imports, seek alternatives to Iran.

Iran is Turkey's second largest natural gas supplier.

Washington is also seeking United Nations Security Council backing to toughen sanctions against Tehran over its refusal to suspend its progress in nuclear science.

The US Iran Sanctions Act of 1999 says that if any foreign company invests more than $20 million in Iran's gas and oil sector it is subject to US sanctions.

Turkish energy ministry sources told Reuters TPAO was also interested in investing in Iran's oil sector after the October agreement was signed.

Every year TPAO invests some $1 billion in projects abroad, one official said.

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