It happened quickly and unexpectedly. Just as Western powers started lining up behind the US in ratcheting unilateral sanctions on Iran over its nuclear program, NATO ally Turkey raised Tehran’s hopes that the efforts to isolate it economically would fail.

Following an official visit to Turkey last month, Oil Minister Masoud Mirkazemi said the National Iranian Gas Export Company had signed a $1.3 billion contract with a Turkish company to build a 410-mile portion of a pipeline that would eventually supply gas to Europe transiting through Turkish territory.

The announcement was untimely and diplomatically charged. It came only days before the imposition of unilateral EU sanctions targeting energy investments and banks in Iran. It also conditioned British Prime Minister David Cameron’s visit to Turkey. The information was contradictory and scarce, but indicated Turkey was apparently willing to defy its allies’ economic noose of Iran. Turkish Energy Minister Taner Yildiz quickly denied any government involvement in the pipeline contract, but suggested private investments could be involved in the venture.

Western concern is not so much over the pipeline, considering the obstacles it would have to overcome, but over Ankara’s intentions.

“My instinct is this has far more to do with politics than with commercial gas transactions,” said Paul Stevens, senior energy research fellow at Chatham House in London. “Given that Turkey has access to a lot of gas, I would question the commerciality of this. I strongly suspect Turkey is doing this to piss off the Israelis after their breakdown in relations. It’s also the Iranians trying to reduce their isolation.”

Iran has long offered Europe gas to as diplomatic leverage in the long-running standoff over the country’s uranium enrichment. Europe has always publicly ruled out any deal with Iran, despite its efforts to diversify its supply to decrease dependence on Russia, until the nuclear issue is resolved.

In the past Turkey has been careful to deny Iran any major window to sidestep Western sanctions out of both economic and political interest, despite its eagerness to position itself as an energy corridor and to diversify its own supplies. But Turkey’s willingness to exploit its influence with Tehran has its limits and could damage its relations with Western powers that already have to deal with Russian and Chinese mild interpretation of the sanctions.

Turkish muscle-flexing in the Iranian quagmire is not new either. It has for some time pursued its own policy, distancing itself not just from the West, but also from other world powers in an effort to build its credentials as a regional power.

In May, Ankara was the driver of the three-sided last minute agreement that also included Brazil to avoid a fourth set of UN Security Council sanctions, a move that triggered a rebuke from Washington. Turkey also voted against its NATO allies in the Security Council. And it has also said it will not abide by Western unilateral sanctions, only those imposed by the UN.

Western powers want to lure Turkey to its side. “Which European country could have the greatest chance of persuading Iran to change course on its nuclear policy?” Cameron asked this week in Ankara. “Of course, it’s Turkey. So we need Turkey’s help now in making it clear to Iran just how serious we are about engaging fully with the international community.”

Europe is offering little to Ankara though, especially as accession into the EU is still opposed by France and Germany, even if strongly supported by the UK. Turkey also feels betrayed by the US in its standoff with Israel.

But the pipeline deal would go far beyond diplomatic posturing and give Iran significant political and economic leverage by exporting gas to Europe through Turkey. The deal would also come in the footsteps of a long-term Pakistani gas contract signed in May, together rendering any sanctions largely toothless, both economically and politically.

Whether the planned gas pipeline, which would be the second connecting Iran to Turkey, is built is still uncertain. The chairman of Som Petrol, a Turkish energy company, confirmed the contract had been signed, only after Iran’s Oil Ministry news service Shana quoted NIGEC’s managing director Javad Oji apparently named another company.

Oji also said the pipeline follows a deal signed last year by Turkish President Recep Tayyip Erdogan to transfer Iranian gas through its territory on the way to Europe, paying a transit fee. If the pipeline is built, Iran’s gas export capacity to Turkey would almost triple by adding around 2 billion cubic feet a day. Projections suggest the line could be completed by 2014.

In 2009 Iran exported around 500 Mcfd to Turkey, using only half of the existing pipeline’s capacity, according to the BP Statistical Review.

In fact, Turkey’s energy minister Yildiz also said plans to invest $5.5 billion in developing around 1 Tcf of production a year from Iran’s South Pars field has been cancelled.

Regardless, there is no mention yet of the portion of the pipeline that has to be built in Turkey or of long term gas supply contracts that normally precede construction investments.

Iran has indicated the new pipeline could eventually be attached to the Nabucco pipeline, but that is years away. A separate pipe would require a buyer on the other side, which have to include big European clients. Switzerland, which signed a gas supply deal with Iran in 2008 and later a transit one with Turkey for almost 200 Bcf annually, could benefit from a pipeline, but those supplies alone would not justify such the project.

That said, Iran began laying the pipeline to export gas to Pakistan years before the final supply contract was signed earlier this year. Of course, the current circumstances are different. Iran is cash strapped as it is and its ability to free up enough additional gas supply to export is at best uncertain. And European and American sanctions will certainly delay any company’s ability to build the pipeline.

It is also unlikely any Turkish company or the government would go as far as to commit to a long-term gas supply contract just as the West ratchets up pressure on Tehran. After all, Turkey is not hard pressed like Pakistan. The Turks have enough gas supplies from Russia and Azerbaijan to meet local demand, allowing it to delay any final decision on Iranian gas transit or imports.

That could change though if Turkey eventually concludes dealing with Iran directly is more beneficial to its own interests -- even if that means undermining Western policies.