TURKEY READY FOR SOLUTION ON WINTER CASPIAN GAS

C O N F I D E N T I A L SECTION 01 OF 02 ANKARA 006623

SIPDIS

SIPDIS

USDOC FOR 4212/ITA/MAC/CPD/CRUSNAK
DOE FOR CHARLES WASHINGTON
EUR ALSO FOR MATT BRYZA
S/P FOR STEVE HELLMAN

E.O. 12958: DECL: 11/12/2016
TAGS: ENRG EPET PREL TU GG AJ
SUBJECT: TURKEY READY FOR SOLUTION ON WINTER CASPIAN GAS

REF: A. STATE 195627


B. ANKARA 6569

C. ANKARA 6396

Classified By: AMBASSADOR ROSS WILSON FOR REASONS 1.5 (B AND D)


1. (C) SUMMARY: On the eve of his departure for the December
8 three-way meeting in Tbilisi on winter natural gas, Energy
Minister Guler told Ambassador that Turkey was committed to
following through on the political agreement made by leaders
in Istanbul on the margins of the BTC opening to help Georgia
get gas to get through this winter. However, he insisted
there must be suitable arrangements and compensation for
costs to Turkey from postponing rights under its contract
with the Shah Deniz consortium. Ambassador encouraged Turkey
to exercise a leadership role, mindful of the existential
risks faced by Georgia. The Minister said that he would not
be able to participate in a proposed follow-on meeting
December 14, given an oft-postponed commitment to travel to
Israel on that date. Ambassador urged the protagonists in
Tbilisi to reach agreement on a date for a follow-on meeting
together with the consortium toward achieving a commercial
solution agreeable to all. The USG would be available to
facilitate such a meeting, he said. End Summary.

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Three Ministers in Tbilisi - We Need Gas in the Winter Too!
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2. (C) Reminding Guler of the agreement made by leaders in
Istanbul on the margin of the BTC opening last July,
Ambassador asked the Minister to exercise a leadership role
at the December 8 three-way meeting in Tbilisi, especially
given the immense stakes involved and threats to Georgia and
Azerbaijan (Refs). Ambassador noted that there should be a
series of bilateral discussions, but some conversations could
only take place among all three.


3. (C) The Minister said he had been waiting for agreement
between Azerbaijan and Georgia as was agreed at the July
meeting. He noted that given negotiations with and pressure
from Russia, Azerbaijan had delayed meeting until recently,
and there was still no clear understanding between Azerbaijan
and Georgia. Guler understood the difficulties of the two
countries, but Turkey needed gas itself, particularly in the
winter, given the unreliability of Iran as a supplier. The
Minister highlighted two separate problems. First, the GOAZ
now claimed the Shah Deniz gas for itself, but Turkey's
contract is with the consortium. Second, the issue of price
was alarming the Turkish public and fanning political
tension; for example, the issue of the price of gas to be
delivered to Greece via TGI was criticized in the press as
much less than the price for gas from Russia. Guler joked
that he will likely be greeted as a "savior" in Tbilisi,
adding, "We ARE willing to give, but we cannot."


4. (C) Ambassador characterized the December 8 meeting as an
important opportunity to delineate gas demand and existing
and potential supplies and alternatives. He recognized that
any solution will have to recognize that Turkey would bear
significant costs for potentially postponing delivery of
Azerbaijani gas and Turkey would have to be compensated for
this cost. Ambassador stated that there were three key
decision makers in Baku: President Ilham Aliyev himself, MOE
Natik Aliyev, and MOF Samir Sharifov. Guler expressed
frustration that Samir Sharifov never accepted his invitation
to come to Ankara; rather DPM Abid Sharifov was sent.


5. (C) In the same meeting, acting DG Saltuk Duzyol stressed
that Turkey was ready to receive contracted gas at its
border. Moreover, he noted that Turkey had commitments to
deliver some of that gas to Greece. Duzyol questioned how
the GOAZ can force the consortium to give up gas for domestic
consumption in Azerbaijan. Ambassador noted that BP and the
consortium had some other issues with the GOAZ unrelated to

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Turkey or South Caucasus gas. He recommended that Turkey
seek to avoid getting in the middle of these unrelated
issues. Duzyol repeated that Turkey had a particular need to
receive contracted gas during the winter months. He noted
that Iran was unreliable even now when Teheran was minus 2
celsius; at minus 10, Turkey certainly cannot count on Iran.

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Next Step? Follow-on Meeting in Baku December 14?
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6. (C) Guler said he would be unable to reschedule his
oft-postponed trip to Israel December 13-15 (Turkey-Israel
energy cooperation is also important) to attend a December 14
meeting in Baku; he asked if a different date couldn't be
set. Ambassador recommended that the parties determine the
next steps and timing while in Tbilisi. He repeated the
offer of the USG to participate in a follow-on session
including the consortium, if that would be helpful.
Ambassador said that the USG would be prepared to use its
influence in capitals to help forge a solution. He repeated
that Turkey's contribution would be critical, but he
understood that it could not be charity. Ambassador reminded
the Minister that the countries will get the best deal vis a
vis Russia if they work together, rather than separately.

Visit Ankara's Classified Web Site at
http://www.state.sgov.gov/p/eur/ankara/

WILSON