TURKISH PETROLEUM OPTIMISTIC ABOUT BUSINESS IN A

C O N F I D E N T I A L ANKARA 000935

SIPDIS


STATE FOR E, EB/CBED, EB/ESC, EUR/SE
STATE PASS NSC FOR QUANRUD AND BRYZA
USDOC FOR 4212/ITA/MAC/OEURA/CPD/DDEFALCO
USDOE FOR PUMPHREY/ROSSI


E.O. 12958: DECL: 02/05/2013
TAGS: ENRG ECON EPET AJ GG KZ TU
SUBJECT: TURKISH PETROLEUM OPTIMISTIC ABOUT BUSINESS IN A
POST-SANCTIONS IRAQ

REF: ANKARA 6593


Classified by EconCouns Scot Marciel, Reason 1.5 (b,d)



1. (C) Summary: The Turkish Petroleum Agency (TPAO) is
optimistic about business opportunities in a post-sanctions
Iraq. TPAO Vice President Bakiler believes TPAO will be
well-placed to sign exploration and production agreements
that the company has been negotiating for years with Iraq,
and to finalize the 1997 "Agreement on Iraq Natural Gas
Exports to Turkey." TPAO has no current business activity in
Iraq, other than three rigs and 15 employees still in-country
after recently completing a drilling contract. End summary.



2. (C) Turkish Petroleum Agency (TPAO) Vice President Can
Bakiler told econoff February 4 that TPAO is optimistic about
business opportunities in a post-sanctions Iraq. Bakiler
said that, after U.N. sanctions were lifted, TPAO should be
in a good position in three particular areas: exploration,
production, and realization of the Iraq-Turkey Natural Gas
Project (reftel). On exploration, Bakiler said, TPAO had
been in discussions with the Iraqi Ministry of Oil since 1994
to form a joint venture for hydrocarbon exploration in Iraq.
Although they had never finalized a contract, the basis of an
agreement existed. Bakiler opined that, once sanctions were
lifted, TPAO should be well-placed to begin exploration
activities.



3. (C) Bakiler reported that TPAO had also negotiated with
the Iraqi Ministry of Oil for years on development of the
Gharraf Oil Field. Again, a contract had never been signed,
but the groundwork for an agreement had been completed.
Bakiler noted that the 1997 "Agreement on Iraq Natural Gas
Exports to Turkey" called for the development of five Iraqi
gas fields for the purpose of export to Turkey (reftel).
Bakiler said TPAO hoped to move forward with Iraq on the gas
deal, as well as the exploration and production agreements,
immediately after sanctions were lifted.



4. (C) Commenting on TPAO's current activities in Iraq,
Bakiler stated that the international subsidiary of the
company, TPIC, had recently completed a U.N.-approved turnkey
contract to drill 20 wells in northern Iraq, in the region
between Kirkuk and Mosul. Most of the 45 TPAO employees
working on this contract had left Iraq, with only about 15
personnel remaining. (Note: Bakiler noted that only retired
TPAO employees working on contract were sent to Iraq.) In
addition, three of TPAO's oil rigs still remained in Iraq,
near the site where the drilling work was done. Bakiler
claimed that TPAO had not yet decided whether to evacuate its
personnel or the rigs. The rigs were about 25 years old, and
therefore only worth about USD 1-2 million each; therefore,
they likely would remain in Iraq. Bakiler asked econoff if
the U.S. could confirm whether oil rigs in the region between
Kirkuk and Mosul had a high risk of being destroyed in the
case of a military operation.
PEARSON