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.

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Iraq Gas Meeting - Modest Expectations
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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.

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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.

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...But, Be Careful on Iran
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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.

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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