SECRETARY ABRAHAM,S SEPTEMBER 21 BILATERAL MEETING

UNCLAS SECTION 01 OF 03 ANKARA 005698

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SENSITIVE

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E.O. 12958: N/A
TAGS: EPET EWWT EMIN ETRD EINV OVIP TU
SUBJECT: SECRETARY ABRAHAM,S SEPTEMBER 21 BILATERAL MEETING
WITH TURKEY ENERGY MINISTER IN ISTANBUL

REF: ANKARA 5306

Sensitive But Unclassified. Please Handle Accordingly.

(U) Paricipants:

U.S.:
Secretary of Energy Spencer Abraham

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EUR Special Negotiator Steven Mann
Consul General David Arnett
Chief of Staff Joe McMonigle
Senior Advisor Majida Mourad
Senior Advisor Mary Hayward
Embassy Note-taker David Young
Advisor Chuck Washington

Turkey:
Minister of Energy and Natural Resources Hilmi Guler
TPAO (Turkish Oil Company) President Osman Saim Dinc
Head of Department Cigdem Hatunoglu


1. (SBU) SUMMARY: Secretary of Energy Spencer Abraham and
Turkey Energy Minister Hilmi Guler covered a range of energy
issues in a meeting in Istanbul on September 21. Areas
identified for continued and deepened cooperation were
Baku-Tbilisi-Ceyhan oil pipeline completion in mid 2005;
promotion of Turkey as an East-West Energy Hub; development
of gas and LNG transshipment and processing capacity; energy
sector investment, renewable energy; development of energy
links with Iraq; cooperation on nuclear issues, both
non-proliferation and potential peaceful use of nuclear
energy in Turkey; and a US-Turkish energy conference. The
Secretary encouraged Minister Guler to visit the U.S. to

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facilitate cooperation and information sharing. He promised
that expert areas within his agency and the USG would follow
up on opportunities in the areas mentioned. The Energy
Bilateral was followed by a short press conference;
subsequent local press coverage was uniformly positive,
stressing cooperation and mutual interest. End Summary.

Baku-Tbilisi-Ceyhan (BTC) ) When to crack the champagne?
--------------


2. (SBU) In their September 21 bilateral meeting in
Istanbul, Secretary of Energy Spencer Abraham and Minister of
Energy and Natural Resources Hilmi Guler lauded the imminent
completion of Baku-Tbilisi-Ceyhan (BTC) Pipeline as symbolic
of their countries, strong cooperation and commitment to
promotion of Turkey as an East-West Energy Hub. Minister
Guler stated that the BTC oil pipeline project was 80 percent
complete and on time. He noted that physical completion
would be substantially complete by the end of 2004 and
testing and pipeline oil fill would allow first oil flow in
June 2005, offering a propitious time for potential
celebration in Ceyhan. Both parties noted that there was
still some risk of problems and delays in Georgia that
required constant vigilance and potential action.

Turkey as East-West Energy Hub
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3. (SBU) Secretary Abraham praised Turkey,s critical role
for regional energy leadership and as a growing East-West
Energy Hub. The Secretary stressed USG concerns about
growing global demand, underscoring the need for increasing
amounts and diversity of supply. Minister Guler noted that
he had responsibility for water, mining, and other natural
resources and sought increased cooperation in those areas.
He applauded Secretary Abraham,s desire to take a tour on
the Bosphorus to see first-hand the need for a timely
Bosphorus by-pass oil pipeline project.

Gas Potential ) Iraq, but, not from Iran
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4. (SBU) The Director of Turkish Petroleum Company (TPAO)
Osman Saim Dinc described his company,s strong interest in
resuming gas and oil exploration in Iraq, noting the
concentration of people and resources the company maintains
in nearby SE Turkey. He said they were working with Baghdad
to resurrect some of these opportunities aimed at transit
through Turkey to Europe. The Secretary said these were
shared goals and big opportunities for Iraq. He called for
greater collaboration between Turkey and Iraq on energy
exploration and development. The Minister and TPAO Director
also highlighted other gas opportunities in the region and
Caspian. They described Turkey,s planned LNG facility for
Ceyhan. Noting rising U.S. and world demand for natural gas
and LNG and desire for diversified sources and trade,
Secretary Abraham expressed support for such a project in a

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stable, friendly country like Turkey. He hoped that Ceyhan
to U.S. could be a gas transit route and partnership, but
commented that any incremental gas for export would be
beneficial in the world gas market. Ambassador Steve Mann
also stated that such a LNG facility would facilitate drawing
out other Central Asian/ Caspian gas, &as long as it is not
Iranian8. Minister Guler expressed interest in working
towards transiting Turkmen gas via Azerbaijan and Turkey,
thus avoiding Iran and Russia and therefore more &safe8.
Guler stated that Caspian gas was a priority, but noted the
growing interest from Europe in Iranian gas. Ambassador Mann
noted previous unsuccessful efforts to bring Turkmen gas, but
expressed willingness to try again if Turkey could also play
a persuasive role.


5. (SBU) The Turkish side expressed praise and thanks for
the continued efforts of Ambassador Steve Mann in working on
the challenge of getting hydrocarbons safely out of the
region. Secretary Abraham recognized Ambassador Mann,s
active contributions and stated that his agency and the USG
would remain excited to help by diplomatic and technical
means.

Renewable Energy
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6. (SBU) Minister Guler described Turkey,s growing interest
in renewable energy such as hydroelectric and solar. The
Secretary and Minister compared notes on challenges of

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enacting new energy bills with incentives for these and other
energy reform aspects. The Minister noted that Turkey could
take advantage of opportunities to export electricity from
renewable sources to European countries with renewable
quotas. The Minister also expressed support for the USG
hydrogen projects, noting that Turkey held 65 percent of the
world,s boron, an important carrier for hydrogen. He also
stated that the GOT had established a hydrogen research
center in Istanbul. Secretary Abraham agreed that there was
a need for additional cooperation in these areas. (Note: DOE
Renewable Energy and Hydrogen expert Robert Dixon will be
visiting Turkey as the featured speaker in the OES Public
Diplomacy Program October 11-15. End Note.)

Nuclear- non-proliferation and peaceful use
--------------


7. (SBU) Secretary Abraham briefly described the IAEA
meetings in Vienna he had just attended, emphasizing the dire
problems posed by Iran,s illegal nuclear program. He noted
the dramatic counter-example of Libya, with whom he had had a
bilateral in Vienna, commending their decision to take timely
steps to embrace acceptable behavior to rejoin the world
community. The Secretary drew attention to his interest in
working more closely on critical nuclear non-proliferation
issues. He stressed the USG readiness to share expertise,
equipment, and tools with our friends on these programs. In
response, Minister Guler stressed his equal desire to work
together on these programs. He acknowledged recent receipt
of the proposed Statement of Intent and regretted that there
had not been adequate time to get to the point of agreement
and signing. The Secretary said he looked forward to
eventually bringing that to fruition, but in the meantime he
hoped to move forward on the actual cooperative activities.
Noting a projected shortfall in energy supply, Minister Guler
expressed the desire for assistance on gaining investment and
technology for nuclear power generation capacity. The
Secretary noted the expertise within his agency and U.S.

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companies and stated that we could work together in this
area.

Other opportunities
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8. (SBU) The Secretary acknowledged his willingness to
support a US-Turkish energy conference, specifically
mentioning that DOE had held a similar, very successful event
with the Algerians in 2002, and he noted that the event
brought policy makers, energy experts, government officials,
and business leaders from both sides together, thus enhancing
cooperation and reducing barriers. (Note: The Secretary was
specifically referring to the US-Algerian Ministerial LNG
Summit that was co-hosted by the Secretary and Algerian
Energy Minister Chakib Khelil.) The Secretary also noted
that DOE was planning to send a team of technical experts to
Turkey to discuss various energy related issues with their
Turkish counterparts.


9. (SBU) Minister Guler briefly described on-going
liberalization of Turkey,s electricity sector, noting that
transmission would remain with the state, but production,
distribution, and trading entities would be privatized. He
expressed desire for U.S. company participation in these
opportunities. Secretary Abraham noted that the USG had
played a role in bringing various partners together in
assisting electricity and energy reform processes in
countries like Italy, Algeria, and others. (In separate
meetings with the Minister, he has been reminded about U.S.
concern about some energy investment disputes involving U.S.
companies, always with emphasis on the need to propose and
implement solutions guided by contract sanctity and the need
to maintain a welcoming and transparent investment
environment.)


10. (SBU) In a separate meeting with Minister Guler,
Ambassador Steve Mann stressed the importance of GOT and USG
reinforcing each others, messages on stepping up support for
the Aktau (Kazakhstan) link to BTC, keeping BTC construction
on track in Georgia, working to access Turkmenistan natural
gas, and remaining tough on Iran.


11. (SBU) Comment: Embassy expresses its appreciation to all
parties which helped bring this successful visit to fruition,
allowing a useful and timely meeting of our energy ministers
in Turkey. It will be important to assure timely follow-up
in all areas cited in the meeting. End Comment.


12. (SBU) This message was cleared by Secretary Abraham's
staff.
EDELMAN