TURKEY ENERGY MINISTER ON EXPANDING SOUTHERN GAS

C O N F I D E N T I A L ANKARA 000518 SIPDIS SIPDIS USDOC FOR 4212/ITA/MAC/CPD/CRUSNAK DOE FOR CHARLES WASHINGTON AND LANA EKIMOFF EUR ALSO FOR MATT BRYZA SCA ALSO FOR STEPHEN MANN E.O. 12958: DECL: 03/06/2017 TAGS: ENRG EPET PREL TU AJ TX IZ IR SUBJECT: TURKEY ENERGY MINISTER ON EXPANDING SOUTHERN GAS CORRIDOR REF: A. ASHGABAT 261 ¶B. ANKARA 479 ¶C. ANKARA 407 Classified By: AMBASSADOR ROSS WILSON FOR REASONS 1.5 (B AND D) ¶1. (C) On March 6 Ambassador and Turkish Energy Minister Hilmi Guler discussed state of play on the "southern gas corridor," including the potential roles of Iraq, Azerbaijan, and Turkmenistan. The Minister looked forward to the March 9 meeting with Iraqi gas experts in Istanbul as a start on a long process. He admitted that recent energy discussions with Iran had reaped progress on gas price, transit of Turkmen gas, and potential Turkish participation in hydrocarbon development. Regarding Iran, Ambassador strongly cautioned the Minister on USG and UNSC sanctions, as well as the risk that this could stifle development of gas exports from Turkmenistan. End Summary. -------------- Iraq Gas Meeting - Modest Expectations -------------- ¶2. (C) Ambassador characterized the March 9 meeting as a good start on what will be a long process of exchanging information and views on hydrocarbon development, including possible export of gas, but cautioned the Minister to keep modest expectations for this initial meeting. The Minister was disappointed that the Iraqi Oil Minister could not attend, but was pleased by the participation of EUR DAS Matt Bryza. In addition to development of northern gas, the Minister expressed an interest in gas development in the south, status of plans to augment security of the Kirkuk-Ceyhan oil pipeline, as well as oil development. He hoped to share Turkey's views and vision on regional hydrocarbon pipelines and state oil company TPAO's expertise and eagerness to contribute to development in Iraq. The Ambassador said a good outcome would be agreement for experts to meet again in 3-6 months. -------------- - Potential Movement on TCP from Turkmenistan... -------------- - ¶3. (C) On southern gas corridor issues, Ambassador said we perceived a strategic shift in Azerbaijan's thinking on gas exports and EUR DAS Bryza would provide more details on this on the margins of the Iraq meeting. He also described what seemed to be positive developments coming out of SCA PDAS Stephen Mann's recent meetings in Turkmenistan (Ref A), indicating that the new leadership may be ready to reexamine gas pipeline options including TCP and transit via Turkey, and to embark on expert level discussions on Caspian delimitation and TCP. -------------- ...But, Be Careful on Iran -------------- ¶4. (C) Responding to Ambassador's question about his recent meeting with Iranian FM Mottaki (REF B),Guler said the meeting yielded progress on price and transit of Turkmen gas via Iran. He admitted that Iran was overwhelmingly focused on gaining transit to Europe via Turkey. Guler said the Iranians offered "new pricing principles" for Iranian gas sales to Turkey and showed openness for the first time to the Turkish idea of establishing a joint stock company for gas transit and development, including potential for Turkish participation in hydrocarbon extraction in Iran. The Minister emphasized that there was no firm agreement, but that these issues would be taken up during a visit yet to be scheduled of the Oil Minister. ¶5. (C) Ambassador gave a strong warning of caution on Iran. He emphasized that Iran was focused on development of its own gas reserves, so it would never support transit of Turkmen gas. Instead, it would seek to bottle up Turkmen gas and prevent it from coming to new markets. An Iranian undertaking with Turkey could kill the TCP and effectively insure that Turkmen gas does not reach Turkey or Europe. Ambassador also underscored USG and UNSC sanctions on Iran, including ISA, noting that Turkey moving forward in these areas with Iran could even increase likelihood of the U.S. Congress passing an Armenian genocide resolution. ¶6. (C) The Minister said he personally saw the TCP as the best route from political, technical, and environmental perspectives. He urged that we work together to expedite this link between Turkmenistan and Azerbaijan, noting that he had traveled to Turkmenistan for both the funeral and inauguration. Ambassador encouraged this and suggested that we stay in close touch regarding contacts with Azerbaijan and Turkmenistan. -------------- Samsun-Ceyhan Bosphorus Bypass -------------- ¶7. (C) Responding to the Minister's query about the recent press quote that "the Ambassador said the U.S. opposes Samsun-Ceyhan," Ambassador explained that he had discussed this issue in a private meeting with BOTAS staff in which press had not been present. He said he was disappointed that BOTAS felt it necessary to background on the meeting to the press. He explained what had been his comments to BOTAS: the United States supports a Bosphorus bybass, has no preferred candidate -- and in that sense neither supports nor opposes Samsun-Ceyhan, and believes the companies and the countries involved should work out the best route. This represented no change in U.S. policy. ¶8. (C) COMMENT: This conversation covered new ground on Turkmenistan and TCP as a means to augment the viability of the southern gas corridor. Azerbaijan is still the key first piece. EUR DAS Bryza will be able to advance these issues with Minister Guler on the margins of the Istanbul gas meetings. The Iran issue will be a recurring theme, and we will need to be very clear about the problems that could arise if Turkey and Iran agree on gas transit or Turkish participation in Iran's energy sector. Visit Ankara's Classified Web Site at http://www.state.sgov.gov/p/eur/ankara/ WILSON