TURKEY,S MINISTER CALLS TCP DRIVING FORCE FOR

C O N F I D E N T I A L SECTION 01 OF 02 ANKARA 001010

SIPDIS

SIPDIS

USDOC FOR 4212/ITA/MAC/CPD/CRUSNAK
DOE FOR CHARLES WASHINGTON
EUR ALSO FOR MATT BRYZA AND STEVE MANN
EXIM FOR MARGARET KOSTIC

E.O. 12958: DECL: 02/27/2016
TAGS: EPET ENRG EWWT SENV TU IZ RU IR TX
SUBJECT: TURKEY,S MINISTER CALLS TCP DRIVING FORCE FOR
EAST-WEST CORRIDOR

REF: A. ANKARA 544

B. ANKARA 413

C. 05 ANKARA 7656

D. ASHGABAT 108

Classified By: AMBASSADOR ROSS WILSON FOR REASONS 1.4 (B,D)


1. (C) SUMMARY: GOT Energy Minister Guler appealed February
27 to Ambassador for USG support on the Trans-Caspian
Pipeline fQ natural gas from Turkmenistan and Samsun-Ceyhan
Bosphorus bypass oil pipeline. He welcomed cooperation with
the U.S. on approaching Turkmenistan to advance TCP, as an
alternative to Russian and Iranian gas to Europe. Following
up on his February 7-9 visit to Washington D.C., the Minister
also asked for ExIm Bank support for U. S. exports and
investment, especially in the GOT,s announced nuclear power
plant program. End Summary.

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Trans-Caspian Pipeline as "Driving Force"
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2. (C) Guler stated that USG support would be critical and
the timing was right for pushing the Turkmen president to
move forward on relaunching the Trans-Caspian natural gas
pipeline (TCP). Citing pressure from the Russians to transit
through Turkey to Europe, and for Iran and a number of
European countries to do the same for Iranian gas, Guler said
that there was only a window of weeks or months if TCP is to
succeed. He called TCP a "driving force" that could prevent
Russian and Iranian domination of natural gas sourcing for
Europe. He said egress of Turkmen gas via TCP was supported
at the highest level in the GOT.


3. (C) Guler noted that Turkey already had a contract with
Turkmenistan, but both Russia and Iran were blocking transit
of Turkmen gas to Turkey (neither are Energy Charter
members). The Minister also stated that we could cooperate
to reshape the Nabucco project, by working with EU countries
to keep Iran out of the mix, and that his personal initiative
had so far blocked transit of Iran gas from Turkey. He
stressed that developing sources of Turkmen, Azeri, Iraqi,
and Egyptian gas would be beneficial both economically and
diversify Turkey's and Europe's gas supplies. Guler
enthusiastically said this would be a "win-win-win-win"
situation and called for clear USG support.


4. (C) Noting that the USG and GOT were closely aligned on
supporting realization of a southern east-west energy
corridor, Ambassador outlined USG views on next steps for
advancing TCP potential. He said the USG wanted to closely
coordinate with the GOT on approaching Turkmenistan. EUR DAS
Matt Bryza may be available to visit Turkey the week of March
13 to consult in advance of a stop in Ashgabat to see
President Niazov; Guler welcomed this. Ambassador said it
may be possible jointly to approach the Turkmen; Guler said
he would consider it. Ambassador also said we are working
toward TDA feasibility studies of TCP lines from Turkmenistan
and Kazakhstan. Ambassador said Washington is prepared to
explore interest among potential U.S. investors, but Turkey
should take the lead in forming a consortium, perhaps led by
Ahmet Calik and Calik Enerji. Noting that Azerbaijan was
focused on development of its own gas resources, Ambassador
stressed that gaining its cooperation with appropriate IGA
and commercial arrangements would also be critical, and we
should think how best to engage Baku.


5. (C) Turning to Turkey's own work, Ambassador emphasized
the importance of completing the South Caucasus Pipeline by
the end of 2006 as a key step in demonstrating the commercial
feasibility of a broader East-West energy corridor. Keeping
Turkish-Greek discussions and pipeline construction on track
would also be important. He warned that Turkey,s
discussions with Russia about increased purchases of gas and
expanding Blue Stream could send negative signals to the
market about TCP prospects.


6. (C) Responding that Blue Stream could also serve as a
source for Israel, the Minister acknowledged the problem, and
emphasized the sensitivity and sense of urgency on energy
supply diversification. He said that he suffered personally
when a confluence of recent events had highlighted Turkey,s
energy supply vulnerability. Guler lamented that many

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agencies in the U.S. did not perceive how important TCP was.
As Ambassador departed the Minister's office, Guler confided
privately that Blue Stream is a problem and that he does not
want to increase Turkey's already high energy dependence on
Russia. It seemed clear that he is also under great pressure
to increase Turkey's overall energy supplies as quickly as
possible.

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Samsun-Ceyhan Still the Chosen Bypass
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7. (C) Minister Guler said the GOT's second priority was
realizing the Samsun-Ceyhan Bosphorus bypass oil pipeline.
(Note: Ahmet Calik has been anointed the champion for this
long supported project, for which the GOT has so far not been
effective in attracting broader support. End Note). The
Minister said that this too was a project that was in both
our countries' interest. Guler said the GOT was committed to
developing Ceyhan as an oil-gas hub, not just for Turkey, but
for the region, which would facilitate oil/gas transfer to
third countries. Thanking the USG for its critical support
for BTC, he hoped that the USG could show comparable support
to push Samsun-Ceyhan. He noted prospecting work being
sourced out by Chevron and others in Turkish Black Sea water.
Commercial deposits there could improve the commercial
viability of a Samsun-Ceyhan pipeline.

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Nuclear and ExIm
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8. (C) The Energy Minister said he had appreciated his tour
of Lake Anna Nuclear Plant, noting that he was closely
following President Bush,s energy plan, especially with
respect to incentives for investment. Guler said that Turkey
would need $120 billion in energy investment through 2020, of
which $100 billion will go for electricity. He was
enthusiastic about his meeting with the ExIm Chairman and he
was hopeful that ExIm could make attractive offers in export
financing to entice U.S. investors to participate, either in
nuclear or other power projects.

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Feting BTC First Oil
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9. (C) Responding to Ambassador's question on whether BOTAS
would indeed finish BTC by the target of May 27, Minster
Guler insisted that it was on track. Moreover, he claimed
that the delays in Turkey were caused by scope and timing
changes by BP, and BP would cover the consequent cost
overruns. (BP has separately told us that ) in the
interests of getting the project complete ) it acquiesced on
this battle. BP also said that the heavily negotiated
Treasury guarantee for cost over-runs was not politically
actionable.) Guler reriterated Turkey's interest in very
senior-level USG participation at first Ceyhan tanker
ceremony, targeted for the June 15-20 timeframe.

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Chevron and its SE Turkey Permit
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10. (C) Ambassador urged action on Chevron's application to
carry out seismic work in the Silopi/Sirnak region of SE
Turkey this spring. Guler said he supported Chevron,s
access and had raised the issue with the Jandarma and Defense
Minister, and intended to raise it with the National Security
Council. Noting that it was not a pre-condition, Guler
nevertheless observed that Chevron has been unable to choose
between Burgos-Alexandropolos and Samsun-Ceyhan.


11. (C) Comment: Guler got and appreciated the message that
we are serious about TCP and he clearly welcomes high level

U. S. engagement. If EUR DAS Bryza is able to come here, we
can advance our TCP agenda and consult on strategy and
tactics with Turkmenistan and other regional players.

WILSON