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