Identifier
Created
Classification
Origin
06ANKARA4935
2006-08-25 13:32:00
CONFIDENTIAL
Embassy Ankara
Cable title:
TURKEY AND SOUTHERN GAS CORRIDOR - NUDGING JELLO
how-toVZCZCXRO1196 RR RUEHAG RUEHDBU DE RUEHAK #4935/01 2371332 ZNY CCCCC ZZH R 251332Z AUG 06 FM AMEMBASSY ANKARA TO RUEHC/SECSTATE WASHDC 8205 INFO RUCNCIS/CIS COLLECTIVE RUCNMEM/EU MEMBER STATES RUEHAM/AMEMBASSY AMMAN 0838 RUEHGB/AMEMBASSY BAGHDAD 0723 RUEHEG/AMEMBASSY CAIRO 0331 RUEHDM/AMEMBASSY DAMASCUS 1566 RUEHNE/AMEMBASSY NEW DELHI 0424 RUEHIT/AMCONSUL ISTANBUL 1153 RUEUITH/ODC ANKARA TU RUEHNO/USMISSION USNATO 5118 RHMFISS/CDR USEUCOM VAIHINGEN GE RUEHBS/USEU BRUSSELS RUEKJCS/SECDEF WASHINGTON DC RHEBAAA/DEPT OF ENERGY WASHINGTON DC RUCPDOC/DEPT OF COMMERCE WASHDC
C O N F I D E N T I A L SECTION 01 OF 03 ANKARA 004935
SIPDIS
SIPDIS
DEPT ALSO FOR EUR MATT BRYZA AND STEVE HELLMAN
E.O. 12958: DECL: 08/23/2016
TAGS: ENRG EPET PREL TU GR AZ IR RU
SUBJECT: TURKEY AND SOUTHERN GAS CORRIDOR - NUDGING JELLO
ACROSS THE TABLE
REF: A. ANKARA 4728
B. ATHENS 2078
C. BAKU 1193
D. ASHGABAT 884
Classified By: AMBASSADOR ROSS WILSON FOR REASONS 1.5 (B AND D)
C O N F I D E N T I A L SECTION 01 OF 03 ANKARA 004935
SIPDIS
SIPDIS
DEPT ALSO FOR EUR MATT BRYZA AND STEVE HELLMAN
E.O. 12958: DECL: 08/23/2016
TAGS: ENRG EPET PREL TU GR AZ IR RU
SUBJECT: TURKEY AND SOUTHERN GAS CORRIDOR - NUDGING JELLO
ACROSS THE TABLE
REF: A. ANKARA 4728
B. ATHENS 2078
C. BAKU 1193
D. ASHGABAT 884
Classified By: AMBASSADOR ROSS WILSON FOR REASONS 1.5 (B AND D)
1. (C) Summary: Turkey's Energy Minister Hilmi Guler told
Ambassador August 23 that he would welcome U.S. help in
facilitating meetings aimed at gaining a common, clear,
commercially viable way forward on the southern gas corridor
to Europe. He obsessed about the undesirability of a simple,
open transit regime that would assist mainly Iran; repeated
longstanding skepticism about how much Caspian gas there is;
and waffled on whether Turkey will be a pure transit country
or whether it seeks a buyer/seller role to manage gas trade
across its territory. He also sees a more immediate northern
Iraq gas option than may be realistic. While Guler is aware
of the need to act quickly in securing viable southern
corridor arrangements, we still have some work to do in
nudging Turkey towards a workable gas transit regime. End
Summary.
-------------- --
Moving from Pipe-Dream to Southern Gas Corridor
-------------- --
2. (C) Ambassador told Guler that we had a small window in
which to build a framework that would facilitate long-term
European and Caspian purchase and delivery commitments and
help lead to investments to support them. This would assure
diversity, security, and affordability of supply for Turkey
and Europe. The task was to translate this "pipe dream" into
reality. In terms of process, Ambassador looked toward a
series of working group meetings that we were prepared to
help facilitate: Turkey-Azerbaijan,
Turkey-Azerbaijan-Greece-Italy-(Georgia?),and a larger group
to include Nabucco partners.
3. (C) Ambassador said he understood there were different
models under consideration in Turkey about how to structure
Turkey's role -- a transit country/transit fee role versus a
buyer/seller of gas. The U.S. needed to have a clear
understanding of Turkey's views, as will also potential
buyers, sellers, and investors. In our view, clear and
simple transit fee arrangements would help facilitate the
investment and purchase decisions necessary to bring a
southern gas corridor into reality.
-------------- --------------
Where will the Gas Come from? - Iran is the Obstacle
-------------- --------------
4. (C) Guler identified a number of key obstacles: unclear
intent and exaggeration of gas supplies by all countries,
Russian pressure, and some countries "acting without good
principles". But, the real issue was Iran. Guler insisted
his main goal was to avoid filling Turkey's pipelines with
Iranian gas destined for Europe. He wanted to leave Iran
with "no hope." The Minister vigorously objected to direct
talks between some European countries and Iran, without
including Turkey. Iran was an unreliable supplier, evidenced
by arbitrary cuts to Turkey in the winter when gas was most
needed.
5. (C) Guler lamented that his objections to Nabucco
partners' direct "flirtation" with Iran was feeding the false
impression that Turkey was an obstacle to realizing the
southern gas corridor. Guler feared that Iranian gas would
be the greatest beneficiary of an open and favorable transit
regime. But, there would be no reciprocal open and favorable
transit regime for Turkmen gas across Iranian territory. As
a non-signatory to the Energy Charter, Iran need not offer
any similar transit arrangement for Turkmen gas. Europeans
ANKARA 00004935 002 OF 003
should pressure Iran to provide the same favorable transit of
Turkmen gas across its territory that Iran sought across
Turkey's.
6. (C) The only way to prevent Iranian domination that
Guler could see is for Turkey to be a trader in gas. Without
excluding the option of negotiating case-by-case transit fees
depending on volumes and sources of gas, he espoused the view
that Turkey needed to have some role in and knowledge of gas
transit deals across its territory. Turkey would do this as
a trading partner.
--------------
What about TCP?
--------------
7. (C) Guler saw the trans-Caspian pipeline (TCP) as an
effective tool to deal with an Iran and a Russia that are
advantageously buying and reselling Turkmen gas. He asked
why the U.S. was not more supportive of TCP. Ambassador
said that Ambassador Mann, who recently saw President
Niyazov, found no real change in Turkmenistan's attitude.
Any effort to develop a route for east Caspian gas will
depend first on a serious route for west Caspian gas, hence
our interest in arrangements to get Azeri gas to Europe.
Even with a Baku-to-Europe gas connection in place, Kazakh
gas would likely be the catalyst for TCP. When it is really
on the horizon, Niyazov would be more likely to join.
--------------
Near-term Operational Steps
--------------
8. (C) Guler expressed recognition of the need to move
quickly, recognizing that delays would benefit Russian
interests. Noting the need to get European consumers
committed and investors started on second and third phases of
Shah Deniz in Azerbaijan, Ambassador called again for Turkey
to identify clear and not overly onerous transit arrangements
and to facilitate a timely direct and symbolic contract
between Azerbaijan and Greece through the
Turkey-Greece-Interconnector (TGI) to show that the southern
gas corridor is for real and that these countries can indeed
cooperate to make it happen.
--------------
Is Azerbaijan a Viable Source?
--------------
9. (C) Guler was supportive of facilitating trans-shipment
of Azeri gas, but noted that Azerbaijan was undecided about
its development and its quantities were still not certain and
not sufficient to feed European needs. Georgia's needs were
exaggerated. (He did not mention the arrangement whereby
Turkey proposed to release to Georgia its 20% discretionary
portion of its take-or-pay contract with Azerbaijan.) Guler
also noted that Russia was placing immense pressure on
Azerbaijan, Georgia, and Turkey to not move Caspian gas on to
Europe to compete with Gazprom's monopoly.
--------------
Turkey-Greece Interconnector is a Model
--------------
10. (C) Guler asserted that the token arrangement between
the Turkish and Greek pipeline companies seeding the TGI was
a model. When pressed, he admitted that this still
constituted buying and reselling gas from Azerbaijan
delivered on to Greece. Guler stated that he understood the
Ambassador's point, but he insisted that transit fees would
still have to be negotiated with commercial partners, and
might vary based on volumes and sources, perhaps on a step
basis.
ANKARA 00004935 003 OF 003
--------------
We Support Gas from Iraq
--------------
11. (C) Guler expressed enthusiasm for developing northern
Iraq natural gas with egress via the oil pipeline right of
way to Ceyhan. He also waxed about Turkey's resolve to
develop an LNG terminal at Ceyhan. Ambassador noted that
political questions made Iraq a questionable near-term gas
source. While we would welcome work with Turkey to bring
Iraqi gas to market, Ambassador urged that Guler focus first
on Azerbaijan.
--------------
Comment and Next Steps
--------------
12. (C) The Energy Minister is not lacking in grand vision.
He is working on giant coal-fired power plants
(Afsin-Elbistan),the controversial Ilisu Dam on the Tigris,
multiple refineries (septel),and many lines on the map which
are aimed at the southern gas corridor to Europe. While he
has a sense of urgency and willingness to work out
arrangements that will help facilitate sales, purchases, and
investments for the southern corridor, he wants to control at
least Iran's European sales through Turkey and to win a
substantial share of the gas transit revenue stream for
Turkey.
13. (C) Working on this with Turkey will take time. An
iterative process makes sense: continued U.S.-Turkey
discussions -- perhaps when EUR DAS Bryza and/or Senior
Energy Advisor Hellman can next visit; U.S.-Turkey-Azeri
talks, which need to come together soon -- perhaps not at the
highest level until there is a clearer common understanding;
and the southern corridor working group that would include
Turkey, Azerbaijan, Georgia, Greece, and Italy, and at some
stage adding the Nabucco partners (Austria, Hungary, Romania,
and Bulgaria).
Visit Ankara's Classified Web Site at
http://www.state.sgov.gov/p/eur/ankara/
WILSON
SIPDIS
SIPDIS
DEPT ALSO FOR EUR MATT BRYZA AND STEVE HELLMAN
E.O. 12958: DECL: 08/23/2016
TAGS: ENRG EPET PREL TU GR AZ IR RU
SUBJECT: TURKEY AND SOUTHERN GAS CORRIDOR - NUDGING JELLO
ACROSS THE TABLE
REF: A. ANKARA 4728
B. ATHENS 2078
C. BAKU 1193
D. ASHGABAT 884
Classified By: AMBASSADOR ROSS WILSON FOR REASONS 1.5 (B AND D)
1. (C) Summary: Turkey's Energy Minister Hilmi Guler told
Ambassador August 23 that he would welcome U.S. help in
facilitating meetings aimed at gaining a common, clear,
commercially viable way forward on the southern gas corridor
to Europe. He obsessed about the undesirability of a simple,
open transit regime that would assist mainly Iran; repeated
longstanding skepticism about how much Caspian gas there is;
and waffled on whether Turkey will be a pure transit country
or whether it seeks a buyer/seller role to manage gas trade
across its territory. He also sees a more immediate northern
Iraq gas option than may be realistic. While Guler is aware
of the need to act quickly in securing viable southern
corridor arrangements, we still have some work to do in
nudging Turkey towards a workable gas transit regime. End
Summary.
-------------- --
Moving from Pipe-Dream to Southern Gas Corridor
-------------- --
2. (C) Ambassador told Guler that we had a small window in
which to build a framework that would facilitate long-term
European and Caspian purchase and delivery commitments and
help lead to investments to support them. This would assure
diversity, security, and affordability of supply for Turkey
and Europe. The task was to translate this "pipe dream" into
reality. In terms of process, Ambassador looked toward a
series of working group meetings that we were prepared to
help facilitate: Turkey-Azerbaijan,
Turkey-Azerbaijan-Greece-Italy-(Georgia?),and a larger group
to include Nabucco partners.
3. (C) Ambassador said he understood there were different
models under consideration in Turkey about how to structure
Turkey's role -- a transit country/transit fee role versus a
buyer/seller of gas. The U.S. needed to have a clear
understanding of Turkey's views, as will also potential
buyers, sellers, and investors. In our view, clear and
simple transit fee arrangements would help facilitate the
investment and purchase decisions necessary to bring a
southern gas corridor into reality.
-------------- --------------
Where will the Gas Come from? - Iran is the Obstacle
-------------- --------------
4. (C) Guler identified a number of key obstacles: unclear
intent and exaggeration of gas supplies by all countries,
Russian pressure, and some countries "acting without good
principles". But, the real issue was Iran. Guler insisted
his main goal was to avoid filling Turkey's pipelines with
Iranian gas destined for Europe. He wanted to leave Iran
with "no hope." The Minister vigorously objected to direct
talks between some European countries and Iran, without
including Turkey. Iran was an unreliable supplier, evidenced
by arbitrary cuts to Turkey in the winter when gas was most
needed.
5. (C) Guler lamented that his objections to Nabucco
partners' direct "flirtation" with Iran was feeding the false
impression that Turkey was an obstacle to realizing the
southern gas corridor. Guler feared that Iranian gas would
be the greatest beneficiary of an open and favorable transit
regime. But, there would be no reciprocal open and favorable
transit regime for Turkmen gas across Iranian territory. As
a non-signatory to the Energy Charter, Iran need not offer
any similar transit arrangement for Turkmen gas. Europeans
ANKARA 00004935 002 OF 003
should pressure Iran to provide the same favorable transit of
Turkmen gas across its territory that Iran sought across
Turkey's.
6. (C) The only way to prevent Iranian domination that
Guler could see is for Turkey to be a trader in gas. Without
excluding the option of negotiating case-by-case transit fees
depending on volumes and sources of gas, he espoused the view
that Turkey needed to have some role in and knowledge of gas
transit deals across its territory. Turkey would do this as
a trading partner.
--------------
What about TCP?
--------------
7. (C) Guler saw the trans-Caspian pipeline (TCP) as an
effective tool to deal with an Iran and a Russia that are
advantageously buying and reselling Turkmen gas. He asked
why the U.S. was not more supportive of TCP. Ambassador
said that Ambassador Mann, who recently saw President
Niyazov, found no real change in Turkmenistan's attitude.
Any effort to develop a route for east Caspian gas will
depend first on a serious route for west Caspian gas, hence
our interest in arrangements to get Azeri gas to Europe.
Even with a Baku-to-Europe gas connection in place, Kazakh
gas would likely be the catalyst for TCP. When it is really
on the horizon, Niyazov would be more likely to join.
--------------
Near-term Operational Steps
--------------
8. (C) Guler expressed recognition of the need to move
quickly, recognizing that delays would benefit Russian
interests. Noting the need to get European consumers
committed and investors started on second and third phases of
Shah Deniz in Azerbaijan, Ambassador called again for Turkey
to identify clear and not overly onerous transit arrangements
and to facilitate a timely direct and symbolic contract
between Azerbaijan and Greece through the
Turkey-Greece-Interconnector (TGI) to show that the southern
gas corridor is for real and that these countries can indeed
cooperate to make it happen.
--------------
Is Azerbaijan a Viable Source?
--------------
9. (C) Guler was supportive of facilitating trans-shipment
of Azeri gas, but noted that Azerbaijan was undecided about
its development and its quantities were still not certain and
not sufficient to feed European needs. Georgia's needs were
exaggerated. (He did not mention the arrangement whereby
Turkey proposed to release to Georgia its 20% discretionary
portion of its take-or-pay contract with Azerbaijan.) Guler
also noted that Russia was placing immense pressure on
Azerbaijan, Georgia, and Turkey to not move Caspian gas on to
Europe to compete with Gazprom's monopoly.
--------------
Turkey-Greece Interconnector is a Model
--------------
10. (C) Guler asserted that the token arrangement between
the Turkish and Greek pipeline companies seeding the TGI was
a model. When pressed, he admitted that this still
constituted buying and reselling gas from Azerbaijan
delivered on to Greece. Guler stated that he understood the
Ambassador's point, but he insisted that transit fees would
still have to be negotiated with commercial partners, and
might vary based on volumes and sources, perhaps on a step
basis.
ANKARA 00004935 003 OF 003
--------------
We Support Gas from Iraq
--------------
11. (C) Guler expressed enthusiasm for developing northern
Iraq natural gas with egress via the oil pipeline right of
way to Ceyhan. He also waxed about Turkey's resolve to
develop an LNG terminal at Ceyhan. Ambassador noted that
political questions made Iraq a questionable near-term gas
source. While we would welcome work with Turkey to bring
Iraqi gas to market, Ambassador urged that Guler focus first
on Azerbaijan.
--------------
Comment and Next Steps
--------------
12. (C) The Energy Minister is not lacking in grand vision.
He is working on giant coal-fired power plants
(Afsin-Elbistan),the controversial Ilisu Dam on the Tigris,
multiple refineries (septel),and many lines on the map which
are aimed at the southern gas corridor to Europe. While he
has a sense of urgency and willingness to work out
arrangements that will help facilitate sales, purchases, and
investments for the southern corridor, he wants to control at
least Iran's European sales through Turkey and to win a
substantial share of the gas transit revenue stream for
Turkey.
13. (C) Working on this with Turkey will take time. An
iterative process makes sense: continued U.S.-Turkey
discussions -- perhaps when EUR DAS Bryza and/or Senior
Energy Advisor Hellman can next visit; U.S.-Turkey-Azeri
talks, which need to come together soon -- perhaps not at the
highest level until there is a clearer common understanding;
and the southern corridor working group that would include
Turkey, Azerbaijan, Georgia, Greece, and Italy, and at some
stage adding the Nabucco partners (Austria, Hungary, Romania,
and Bulgaria).
Visit Ankara's Classified Web Site at
http://www.state.sgov.gov/p/eur/ankara/
WILSON