TURKEY - COVERING OLD GROUND ON TRANSIT TO EUROPE

C O N F I D E N T I A L SECTION 01 OF 02 ANKARA 001481

SIPDIS

SIPDIS

USDOC FOR 4212/ITA/MAC/CPD/CRUSNAK
EEB FOR A/S SULLIVAN
EUR FOR DAS BRYZA
SCA FOR DAS MANN
DOE FOR DAS HEGBURG
USTDA FOR DAN STEIN

E.O. 12958: DECL: 06/10/2017
TAGS: ENRG EPET PREL TU AJ RS IZ TX KZ IR
SUBJECT: TURKEY - COVERING OLD GROUND ON TRANSIT TO EUROPE

REF: A. ANKARA 1421


B. ANKARA 1286

C. ANKARA 1121

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


1. (C) SUMMARY: Ambassador and Energy Minister Hilmi Guler
covered familiar ground on gas transit in a June 9 meeting.
Ambassador pushed for Turkey and Azerbaijan to meet to
resolve issues on the current gas contract, and even more
importantly to establish the transit approach for future gas
to Europe. Guler was confident that these discussions would
proceed, but stated that he had not heard lately from the
Azeris. He expressed confidence that there was progress on
Nabucco and the Turkey-Greece-Italy interconnector, with a
first gas ceremony for Turkey-Greece now planned for August

10. Ambassador encouraged the Minister to send a positive
message by quickly completing a MOU with Greece and Italian
Edison on adding Italy to the interconnector. End Summary.

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Modest Delays in TGI Completion and Ceremony - August 10?
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2. (C) Energy Minister Guler told Ambassador that the
Turkey-Greece interconnector (TGI) first gas ceremony would
be delayed from July 12 to August 10, citing delays in
completing the border river crossing and connections with
Greece. Ambassador pressed Guler to move quickly in signing
the MOU with Italian Edison Company, linking Italy to the
TGI. He stressed the need for a clear and positive message
on Turkey's role in gas transit from Azerbaijan to Europe.
Guler was confident that a MOU (what the Turks refer to as an
IGA) would be signed before Turkish elections on July 22.
The Minister asserted that Turkey could meet initial Greek
supplies of 250 MCM pa from domestic production. Guler said
that the parties were close to agreement, noting that Greece
had agreed to Turkey's need for access to up to 20% of the
quantity transited at "net-back" pricing. He said Italian
Edison was still asking questions and thinking, but he was
confident that the company would agree.

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Advancing Nabucco
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3. (C) Guler was also confident about Nabucco, stressing the
need to move forward quickly. He said that the GOT had
gained agreement for Turkey's desired approach (access to up
to 20% of the transited amount and net-back pricing) from
individual Nabucco countries and European Commissioner for
Energy Andris Piebalgs. Guler said that Nabucco partners had
accepted the Turkish offer that Nabucco would use Turkey's
national network for transit across Turkey during the
project's first phase. Nevertheless, Guler was frustrated
that the Europeans were always focused on their needs, and
did not give weight to Turkey's own significant and growing
need for gas. He emphasized the need to work together on
gaining investment in gas, but lamented the over-blown dreams
of potential and existing gas producers, including Russia,
Iran, Iraq, Azerbaijan, and Turkemenistan.

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Getting the Turks and Azeris to Talk Transit...
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4. (C) Ambassador conveyed a sense of urgency and
willingness to help facilitate long awaited gas transit
discussions with the Azeris, noting that we had learned that
main interlocutor SOCAR President Abdullayev had been
directed to come June 15 to Turkey. Guler repeated that the
GOT was ready to talk to Azerbaijan about gas transit issues,
but said he had not heard from them lately. The Minister
noted that he had personally invited Natiq Aliyev, but he had
not received a reply. He asserted that Turkey was ready to
nominate first Shah Deniz gas.


ANKARA 00001481 002 OF 002


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Let's Work Together on Caspian and Central Asia
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5. (C) Guler said that he would be making a long-delayed
trip to Kazakhstan and Turkmenistan. He intended to focus on
assessing and reviving existing projects in gas, oil,
minerals, and electricity. Guler stressed that Turkey and
the U.S. shared the same interest in reviving the
trans-Caspian pipeline (TCP). Ambassador noted that while
USG officials often visited Ashgabat, we were keeping a low
profile on TCP. Ambassador also noted the enticing potential
to establish a short linkage from off-shore Petronas fields
to Azeri off-shore ACG fields, thus potentially establishing
the fait accompli of a TCP.

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Repeated Warnings on Iran
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6. (C) Noting that he would also travel imminently to Iran,
Guler made a case that it was important to integrate Iran
into the international commercial system. He said Turkey's
objectives in discussing energy with Iran were only to meet
Turkey's domestic needs. Guler asked for U.S. views.
Acknowledging Turkey's need to maintain relations with its
neighbor, Ambassador emphasized that the USG is strongly
discouraging countries and companies from investing in Iran,
with a special proscription by policy and law with respect to
oil and gas. Moreover, Ambassador pointed out that reliance
on Iran was risky policy, because Iran has been and would be
an unreliable supplier and partner. Recent UNSC resolutions
make reliance on Iran even less sensible policy.

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COMMENT - DEJA VU ALL OVER AGAIN
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7. (C) COMMENT: While Minister Guler regularly says what we
would like to hear on common interests, he is clearly under
pressure from outside and within his Ministry on Russia and
Iran. There is a significant faction in the Ministry pushing
for increased energy relations with Iran as the viable
alternative to reduce reliance on Russia. While Turkey
appears to have adopted a reasonable stance on transit
(assurance of some quantity at net-back pricing to address
its own energy security and cost),it still has challenges in
meeting and reaching agreements. Initiating transit
discussions between Turkey and Azerbaijan will require
continuous attention on our part.

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

WILSON