BOTAS ON IRAQI OIL AND GAZPROM

C O N F I D E N T I A L ANKARA 004912 SIPDIS STATE FOR PRM, E, EB, E/CBED, EUR/SE, NEA/NGA NSC FOR QUANRUD AND BRYZA E.O. 12958: DECL: 08/05/2013 TAGS: ENRG ETTC PREL TU IZ SUBJECT: BOTAS ON IRAQI OIL AND GAZPROM Classified by EconCouns Scot Marciel, Reason 1.5 (b,d) ¶1. (U) Baghdad minimize considered. ¶2. (C) Summary. BOTAS General Manager Mehmet Bilgic told us August 1 that a 10-person BOTAS technical team was in Iraq with Iraqi officials to inspect the Kirkuk-Yumurtalik pipeline and help get the oil flowing again as soon as possible. Bilgic asked about the veracity of a recent news report that U.S. authorities in Iraq planned to export all oil through southern Iraq and close the Kirkuk-Yumurtalik pipeline. Bilgic said BOTAS and Gazprom had agreed to resume the Blue Stream gas flow, but were still "discussing" outstanding issues in all of their bilateral gas contracts. End summary. BOTAS Team in Iraq -------------- ¶3. (SBU) Bilgic told EconCouns and econoff August 1 that BOTAS had sent a 10-person technical team to Iraq on July 30 to inspect the Kirkuk-Yumurtalik pipeline and help get operations started as soon as possible. Bilgic said the team -- including 3 pump station engineers, 3 pipeline communication system experts, 2 firefighters, and 2 assistants -- was working with Iraqi Oil Ministry officials. Bilgic said the team's preliminary report indicated that the pipeline was in better condition than expected, but they still had not seen the entire pipeline. He noted that one of the problems was lack of communication along the pipeline. Bilgic said BOTAS wanted to get the oil flowing from Kirkuk as soon as possible, and had offered to help the Iraqis achieve this. He said he hoped pipeline operations could resume in August, but would not know until his team returned from Iraq whether that was feasible. ¶4. (SBU) Bilgic said he had seen a recent news article suggesting that U.S. authorities in Iraq planned on exporting all oil through southern Iraq, and no longer planned on using the Kirkuk-Yumurtalik pipeline. EconCouns responded that there was no such plan, and that authorities in Baghdad were working hard to export oil from both the north and south. Relations with DEPA, Gazprom -------------- ¶5. (C) Bilgic said he had had good meetings with DEPA in Greece in mid-July. He said he reiterated BOTAS' interest in DEPA privatization, and continued the dialogue on the Greece-Turkey interconnect. ¶6. (C) Referring to BOTAS' recent dispute with Gazprom over the price formula in the Blue Stream contract, Bilgic said the two companies had decided to resume the Blue Stream gas flow as of August 1. He said the companies still had "disagreements" regarding all of their gas contracts (Blue Stream, Russia West 1 and Russia West 2),including issues regarding price, "take-or-pay" provisions, and duration of the contracts. Indicating that BOTAS paid a higher price for gas than Gazprom's other clients, Bilgic said it was his hope that BOTAS and Gazprom could reach an accommodation that would allow all parties to continue implementing the contracts. DEUTSCH