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BEIJING, Dec 21 (Reuters) - The China-backed Asian Infrastructure Investment Bank (AIIB) has approved a $600 million loan to finance a natural gas pipeline from Azerbaijan through Turkey, it said on Wednesday, taking its total loans in its inaugural year to $1.73 billion.

Once completed, the Trans Anatolian Natural Gas Pipeline Project will transport natural gas from fields in Azerbaijan into Turkey and then markets in Southern Europe, AIIB said in a statement.

The latest loan was granted to Azerbaijan state-owned company Southern Gas Corridor (SGC) to build the 1,850-kilometre pipeline, part of a project that also includes developing Shah Deniz 2 gas field in the central Asian nation, AIIB said.

Chinese President Xi Jinping proposed the bank two years ago and it began operations in January, with 57 founding member countries and $100 billion in committed capital, which it plans to invest in projects across the region. (Reporting by Chen Aizhu; editing by Louise Heavens)