AMBASSADOR DELIVERS BOSPHORUS DEMARCHES TO ENERGY

UNCLAS SECTION 01 OF 02 ANKARA 005051 SIPDIS SENSITIVE E.O. 12958: N/A TAGS: EPET EWWT PREL ELTN EINV ENRG SENV TU UK SUBJECT: AMBASSADOR DELIVERS BOSPHORUS DEMARCHES TO ENERGY MINISTER REF: A. MANN E-MAIL VIA JONES AUG 30 ¶B. STATE 186707 ¶C. STATE 178586 ¶D. STATE 178695 ¶E. ANKARA 4892 SENSITIVE BUT UNCLASSIFIED. PLEASE HANDLE ACCORDINGLY. ¶1. (SBU) SUMMARY: Ambassador delivered ref a-d demarches on Bosphorus bypass issues on August 31 to Minister of Energy Hilmi Guler. Ambassador stressed that the USG did not support a specific route or project, but called for timely, transparent decisions from the GOT on permits, specifically for Thrace Development Company (TDC). Ambassador delivered ref a-d messages on Odessa-Brody and Voluntary Principles on Turkish straits oil tankers and bypass pipelines. Minister Guler promised a timely answer on the TDC permit, but noted that relevant Ministries were still studying all five trans-Turkey applications for issues of environment, safety, and through-put guarantees. End Summary. Thrace Development Company -------------- ¶2. (SBU) Ambassador delivered ref a and d demarche on Thrace Development Company( TDC) on August 31 to Energy Minister Hilmi Guler, stressing that he would deliver the same message to the Minister of Foreign Affairs. While stressing that the USG strongly supported a Bosphorus oil bypass, maybe two, if supported by the market, Ambassador noted that the USG did not support a particular route or project. Nevertheless, he noted the longstanding application and diligent response from TDC for a trans-Thrace route. Ambassador called for at least a timely up or down response. Citing press reports that the GOT supported the Transneft backed trans-Thrace route, Ambassador emphasized that projects should be determined by market and environment realities, not by government lobbying or prescription. Echoing replies from other government officials (ref e),the Minister categorically denied the press reports, stating that the GOT had not reached a decision on route or project(s). He stated that in line with GOT procedures, the five project permit applications were still in the evaluation phase at the relevant ministries. The Minister noted that there had been a recent meeting at the MFA to study the advantages and disadvantages of the proposed projects. In response to a question from the Ambassador, he asserted that this was not a chicken and egg dilemma. Although all the applicants claimed they had lined up through-put guarantees,the Minister said that none could demonstrate a binding commitment from oil companies, so the GOT was unable to yet reach a decision. The Minister promised a timely response, noting that a prolonged process was bad for everyone. Voluntary Principles for Bosphorus -------------- ¶3. (SBU) Ambassador also delivered ref a and c demarche on USG position on Turkish MFA proposed Voluntary Principles on straits oil tankers and bypass pipelines. While expressing support for the GOT's intentions, Ambassador emphasized need for 1) truly voluntary and informal dialogue, 2) identification of principles and informal codes, not formal agreements, 3) participation by Russians, and 4) avoidance of prescriptive approaches. The Minister accepted the objections to the text without expressing any specific differences of views. The Minister agreed with the Ambassador that there was a need for a diversity of pipelines. He said that in his opinion the market would support two pipelines: this could be one trans-Thrace and one Samsun-Ceyhan. The Minister thought another option could be an expansion of capacity of the Baku-Tbilisi-Ceyhan pipeline. Moreover, he thought that there could be a link from Novorossiysk to Baku. Odessa-Brody -------------- ¶4. (SBU) Ambassador delivered ref b point on Odessa-Brody and asked the Minister if this would likely be raised by the GOT with President Putin. The Minister said that GOT would likely NOT raise this issue, but noted that the decision to reverse the pipeline was a big mistake for all parties. He emphasized that Odessa-Brody was the counter-example of a failed speculative project that drove the GOT's need for through-put guarantees in evaluating bypass proposals. Gas and East-West Corridor -------------- ¶5. (SBU) The Minister raised what he viewed as an enhanced bypass opportunity for the Shah Deniz natural gas pipeline if it could include Turkmenistan and Kazakhstan gas moving via Turkey to Europe. In this way, Turkey could make a "smooth slalom", bypassing both Russia and Iran. He noted the particular challenges facing Turkey given take-or-pay contracts and great reliance on Russia (growing with Blue Stream). The Minister said the GOT was at a critical decision point for Iranian gas, noting that the arbitration case between the two countries continued. The Minister claimed that Russia and Iran had some sort of deal on gas. On European demand for Iranian gas, Minister Guler said Europe was not in pressing need of the gas from Iran, but would like to diversify its sources. EDELMAN