Turkey, Brazil look to boost trade, partnerships

* Trade over $1 billion in 2008

* Petrobras to invest $300 mln by end 2010

By Thomas Grove

ISTANBUL, May 21 (Reuters) – Brazilian President Luiz Inacio Lula da Silva and business leaders visited Istanbul on Thursday to secure a stronger foothold in Turkey’s domestic market and make good on its regional ties.

Trade between Turkey and Brazil, which totalled a little more than $1 billion last year, could grow by as much as 400 percent in the short term, Brazil’s Foreign Trade Minister Miguel Jorge said on Thursday.

“We should have three to four times that as soon as possible,” he told Reuters.

Turkey’s attempts to partner with South America’s largest trade bloc, Mercosur, has also given it an opportunity to position itself as the right trading outpost for Brazilian automobiles, ethanol and technology.

“Turkey has a special place for Brazil, because our relations hinge on the trade bloc Mercosur. Basically the point of this partnership would be a four-plus-one formula which would erase import duties for the countries involved,” Jorge said.

Talks for Turkey to become a partner have dragged on but officials remain hopeful a deal will soon be reached.

Mercosur, the South American trading bloc that joins Argentina, Uruguay, Paraguay and Brazil, would be able to ship goods to Turkey without customs duties, and the members are discussing the possibility of exporting those goods duty-free on to Europe, Jorge said.

Turkey’s signing of the European Union’s Customs Union in 1995 erased customs duties between the EU and Ankara.

Turkey and Brazil, two emerging markets, are seeking more trading partners as the European Union and the United States suffer from a significant economic slowdown.

“Turkey and Brazil have great potential, but I believe we’re not even living up to 10 percent of that potential,” Lula told business leaders in Istanbul.

Turkey hopes to tap into an expected $230 billion worth of infrastructure investments Brazil needs in the next four years.

Turkish fuel prices are also among some of the highest in the world, prices which could be cut by importing Brazilian vehicles, 90 percent of which are manufactured with flux technology that allows the use of any mixture of gasoline and biofuel ethanol.

“There are a lot of opportunities, but Brazil has to move beyond exporting commodities and we are looking to do that Turkey,” the Brazilian minister said.

Underlining growing ties, state-carrier Turkish Airlines recently announced it would begin three flights per week to Sao Paulo from Istanbul in June.

Turkey, which relies on foreign oil resources for energy needs equal approximately 100 million barrels of oil per year, agreed earlier this year with Brazilian oil and gas firm Petrobras to explore two wells in the Black Sea.

“We are planning investments of $300 million in exploration activities in the Black Sea in 2009 and 2010. This is the cost of the two wells,” said Petrobras International Director Jorge Zelada on the sidelines of a conference in Istanbul.

Turkish state-owned Petroleum firm TPAO believes the Black Sea has some 10 billion barrels of oil that will help it reduce its dependence on foreign oil.