TURKEY: AMBASSADOR EDELMAN'S MEETING WITH ENERGY

C O N F I D E N T I A L SECTION 01 OF 02 ANKARA 006058

SIPDIS


E.O. 12958: DECL: 09/16/2013
TAGS: ECIN ECON ENRG IZ PREL TU
SUBJECT: TURKEY: AMBASSADOR EDELMAN'S MEETING WITH ENERGY
MINISTER GULER

Classified by Ambassador Eric S. Edelman for reasons 1.5 (b)
and (d). CPA Baghdad minimize considered.



1. (C) Summary: Ambassador Edelman,s first meeting with
Energy and Natural Resources Minister Hilmi Guler focused on
Turkey,s efforts to reduce the high prices it pays for
natural gas imports, principally from Russia, and Guler,s
desire to help U.S. efforts in Iraq. Guler said his Ministry
was looking at ways to deliver water and power to Iraq.
(Prior to the meeting, the Ministry announced the successful
start of power supplies (50 megawatts) to Iraq). Guler
discussed some ambitious, long-term ideas, such as the Peace
Pipeline to deliver Turkish water to the Middle East and
bypass pipelines to reduce tanker traffic through the
Bosphorus. End Summary.


US Support for Turkey,s Energy Goals



2. (SBU) Ambassador Edelman paid a courtesy call September
17 on Energy and Natural Resources Minister Hilmi Guler.
Edelman emphasized the strong support of the U.S. for the
East-West Energy Corridor and congratulated Minister Guler on
the progress on the BTC pipeline, which will bring a new
source of oil supply to world markets. Looking ahead, the
U.S. is interested in the prospects for Turkey to become a
hub for natural gas exports to Europe. Edelman also noted
how important it was for Turkey to succeed in its efforts to
liberalize the energy market and offered U.S. help, including
assistance from the Trade and Development Agency. He noted
that U.S. power companies remain interested in the
opportunities to invest in Turkey,s changing energy sector,
but urged that the problems faced by U.S. firms involved in
Build-Operate-Transfer (BOT) projects needed to be cleared up
before other companies will come.


GOT Priority is Lowering Natural Gas Prices



3. (C) Guler stressed that he wanted to build a more
effective relationship with the U.S, although he avoided
responding to U.S. concerns about the BOT issue. He said
that he attached great importance to the BTC pipeline and was
eager to bring the project on line on schedule. He said that
a great concern for his Ministry was the cost of natural gas,
which accounts for 65% of Turkey,s power production. The
chief problem is the high price Turkey is paying for
long-term contracts from Russia, especially the &very
expensive8 natural gas from the Russian Bluestream project.
Negotiations with Russia to reduce natural gas prices are
near completion, Guler said. He added that the Russians do
not want to see the Shah-Deniz gas pipeline project, which
would bring natural gas from Azerbaijan to Turkey, go
forward. Guler said he was thinking about long-term
alternatives for cheaper gas supplies, including from
Turkmenistan, Iran or Iraq. On Iraq, Guler mused that
someday Iraq could use its great natural gas resources to
produce electricity to sell to Turkey.


Iraq



4. (SBU) In the near term, Guler said Turkey wanted to help
the U.S. bring stability and prosperity to Iraq and was ready
to provide "any assistance we can." He said two important
needs for that country are electric power and water. Guler
told Ambassador Edelman that he recently discussed with
Energy Ministry experts ways his Ministry could contribute to
Iraq. Three immediate ideas were: to ship fresh water to
Iraq by train; to mend electricity lines between the two
countries to increase Turkish power sales to Iraq; and to
ship gasoline by train.



5. (C) Ambassador Edelman welcomed Guler,s expression of
support and ideas to help the situation in Iraq -- more can
be done and the U.S. would welcome further efforts by Turkey.
He noted that security remains a difficult issue impeding
efforts in Iraq. For example, Iraqi resistance has targeted
water infrastructure and oil pipelines, which worsens the
humanitarian conditions. He said that U.S. would welcome
Turkey,s contribution to stabilization forces in Iraq.
Guler offered that perhaps Turkey could provide "special
civil teams" to protect the pipelines. Edelman said that
Turkey should raise these ideas with the Coalition
Implementation Council. He added that the recent initiation
of power sales by Karadeniz Power to Iraq was a very positive
development. Guler called it a win-win-win, referring to the
benefits it brings to Iraq, Turkey and the U.S.


Bosphorus Bypass



6. (U) Guler said he was interested in exploring ways to
reduce the transit of oil tankers through the Bosphorus. He
raised two ideas to bring oil from tankers in the Black Sea
to the Mediterranean -- one crossing Thrace and the other
paralleling Bluestream and on to Ceyhan. Edelman said the
U.S. shared Turkey,s safety and environmental concerns about
rising oil tanker traffic through the Bosphorus. He
emphasized, however, that projects to bypass the Bosphorus
needed to be commercially viable in order to attract the kind
of investment needed for such projects.


Water



7. (U) Ambassador Edelman noted that Guler had cancelled
recently a planned trip to Israel to discuss shipments of
water. Guler said that there was no problem with the
project; he was forced to cancel the trip for medical
reasons. Guler went on to describe his hopes to use Turkey's
water resources to bring peace to the region. In addition to
shipping water to Israel, he wanted to explore abandoned
plans for a peace pipeline bringing water from Turkey to the
Middle East as far as the Gulf States.



8. (C) Comment: Guler was clearly interested in mobilizing
his Ministry to do what it can to help in Iraq, specifically
by addressing near-term needs for power, fuel and water. We
will work with the Ministry to encourage follow through on
these suggestions. However, Guler also was clearly fishing
for U.S. support for some extremely ambitious ideas, such as
using Turkey,s water resources to bring peace to the region.
Although some of his ideas appear impractical, we view his
interest in water as an important opportunity to engage the
Ministry in discussions about regional water issues,
including the Tigris-Euphrates basin. End Comment.
EDELMAN