TURKEY: BOSPHORUS BYPASS VOLUNTARY PRINCIPLES AND

UNCLAS SECTION 01 OF 02 ANKARA 000323

SIPDIS

SENSITIVE

USDOE FOR CHARLES WASHINGTON
USDOC FOR ADVOCACY CENTER AND
4212/ITA/MAC/OEURA/CPD/DDEFALCO
NSC FOR BRYZA AND MCKIBBEN

E.O. 12958: N/A
TAGS: EPET ENRG TU
SUBJECT: TURKEY: BOSPHORUS BYPASS VOLUNTARY PRINCIPLES AND
LICENSES; NOTHING APPEARS NEW WITH RUSSIA ENERGY

REF: A. 04 ANKARA 6484


B. 04 STATE 178586

This is an action request. See paragraphs 2 and 3.


1. (SBU) SUMMARY: The Turkish government still seeks to
pursue its proposed "Voluntary Principles on the Turkish
Straits" as a way to engage all stakeholders in seeking a
solution to the risks of growing tanker congestion. The GOT
is interested in U.S. comments and support for this proposal,
as well as U.S. technical advice on moving forward on
conditional licenses for Bosphorus bypass oil pipelines in
Turkey. Despite great expectations for new or more detailed
Turkey-Russia energy agreements from PM Erdogan's recent trip
to Moscow, per early read-out nothing new was realized. End
Summary.


2. (SBU) VOLUNTARY PRINCIPLES: Mithat Rende, new GOT MFA
Deputy Director General for Energy and Water, told us January
13 that the GOT still aims to pursue proposed "Voluntary
Principles on the Passage of Oil Tankers through the Turkish
Straits" (Ref A) as a way to engage stakeholders. We
reiterated general concerns from Ref B. Rende welcomed U.S.
views and said he would appreciate U.S. comments on the
latest draft of the principles (Ref A). He said the GOT
would welcome whatever role or support the USG could provide
for the principles. Rende said he envisioned next steps to
include collecting comments, engaging all parties, and
eventually convening a conference of stakeholders.


3. (SBU) BOSPHORUS BYPASS CONDITIONAL LICENSES: Rende asked
for an explanation of the "conditional licence" that has been
supported by USG advocacy on behalf of developers of
potential "bypass" oil pipelines across Turkey. We described
a conditional license as comprising permission from the GOT
to build a pipeline of an identified capacity and specific
route contingent upon within six months the project sponsor
obtaining all of the following: an oil throughput commitment,
financing commitment, and international standard
environmental impact assurance. Rende asked for additional
guidance, specific language, or examples that could help him
explain and generate an acceptable conditional license,
saying he could not understand why such a government license
was needed to obtain these commitments. He thought that the
granting of multiple conditional licenses could be an
effective way forward. Embassy requests Department and DOE
advice on conditional licenses to provide to the GOT.


4. (SBU) NOTHING NEW WITH RUSSIA: Like Putin's visit to
Ankara in early December 2004, PM Erdogan's recent visit to
Moscow - with multiple planeloads of business people -
appears in first analysis to have failed to meet high
expectations for energy deals. Again, press reports and
Embassy contacts describe a broad umbrella memorandum of
intent to invest, but no specific commitments. The targeted
investment areas comprise electricity (including nuclear) and
natural gas sectors, including possible extension of the Blue
Stream natural gas pipeline to Ceyhan with a possible LNG
terminal at Ceyhan and/or a pipeline to tran-ship gas to
Israel. There was reportedly no specific agreement on
reducing the price of natural gas. There also apparently was
no agreement on a specific Bosphorus bypass route. According
to Rende, the Russians expressed a preference for the
cheapest route (presumably trans-Thrace) and the Turks
expressed a preference for the most environmentally benign or
sustainable (presumably their favored Samsun-Ceyhan route).


5. (SBU) COMMENT: Rende is getting up-to-speed on his new
portfolio and seems very willing to seek U.S. advice and
help. He said that he would be willing to travel to the U.S.
to discuss Bosphorus issues. Although sometimes hard to pin
down in contacts we have had with him over the years, Rende
has always appeared wary of any move that would make Turkey
too dependent on Russia. In the present case, he is firmly
reaching out to the U.S. - as is also the Minister of Energy
- to try to ensure that Turkey limits Russia influence. The
recent announcement of the three-country political agreement
for the proposed AMBO trans-Balkan Bosphorus bypass pipeline
may be a wake up call for the GOT. Even though there are 3-4
proposed projects on 2 routes solely in Turkey's territory,
the GOT still targets political agreements (so far apparently
unsuccessfully with Russia) and is otherwise still unable or
unsure how to proceed. The GOT appears stuck on how to
fashion conditional licenses to enable project sponsors to go
to the market and keep a Turkey based route in the running.
We may be able to help with this. The "Vountary Principles"
remain a potentially parallel process to engage stakeholders
in improving maritime safety and exploring faciliting
potential pipelines, while not impeding project sponsors
changing the reality on the ground (or on the water) by
seeking commitments from the market.


6. (SBU) COMMENT CONTINUED: We have encouraged our
interlocutors to engage the Russians to promote avoidance of
zero sum thinking, while pointing out the risk of
over-dependence on companies that have engaged in
monopolistic behavior. Russia will likely ultimately be a
part of a viable Bosphorus bypass solution. At the same
time, and in response to keen interest expressed by Minister
of Energy Guler, we will need to work closely with Turkey to
facilite east-west transit of natural gas to Europe from
Azerbaijan - and potentially from Turkmenistan - but not from
Iran. Turkey will have to work to insure that Russian
influence does not work against this goal. In this regard,
Guler and people like Rende look to the U.S. for advice and
support.
EDELMAN