TRILATERAL IRAQ GAS GROUP MEETS FOR FIRST TIME IN ISTANBUL

UNCLAS SECTION 01 OF 02 ANKARA 000614 SIPDIS USDOE FOR CHARLES WASHINGTON USDOC FOR 4212/ITA/MAC/CPD/CRUSNAK SENSITIVE SIPDIS E.O. 12958: N/A TAGS: ENRG EPET PREL TU IZ SUBJECT: TRILATERAL IRAQ GAS GROUP MEETS FOR FIRST TIME IN ISTANBUL REF: A) 06 ANKARA 6745 B) 06 ANKARA 6690 AND PREVIOUS ¶1. (SBU) SUMMARY: U.S., Turkish, and Iraqi officials met March 9 in Istanbul to discuss potential development of Iraq natural gas production for domestic use and export via the "Southern Corridor" network of gas pipelines to Europe. The group agreed to cooperate on attracting gas sector investment, pipeline security, development of oil/gas pipeline networks, electricity generation, and Iraq's national master plan for gas production and distribution. Participants agreed to meet again at a date to be determined. The immediate next step is to coordinate drafting an action plan to identify opportunities and overcome (some significant) obstacles to stimulating gas production in Iraq. End Summary. -------------- -- Emphasis on Collaboration - Long-term Potential -------------- -- ¶2. (SBU) EUR DAS Matt Bryza, supported by a team from NEA, EEB, and Embassies Baghdad and Ankara, represented the USG. The Turkish delegation was led by Energy Minister Hilmi Guler, who was accompanied by senior representatives of his ministry, state pipeline company BOTAS, and state oil company TPAO, as well as MFA Deputy Iraq Coordinator Murat Ozcelik. Iraq was represented by Hunar Hassan, DG of the North Gas Company. The Iraqi Embassy did not attend. ¶3. (SBU) All parties stressed that the meeting was a first step. Guler emphasized Turkey's desire to help Iraq increase security and meet domestic energy needs, and urged consideration of sending excess gas to Turkey for consumption in Turkey and export to Europe. Hassan described the difficult situation in Iraq, underlining that Iraq was in dire need of new investment to help it stem gaps in provision of electricity and natural gas. Bryza stressed U.S.-Turkey energy cooperation, including collaboration on a "southern gas corridor" to help Europe diversify its gas supplies. He emphasized that this meeting was a first step among the three countries to expand gas production in Iraq. Bryza urged the group to focus on attracting investment to Iraq's gas sector to help satisfy Iraq's domestic needs an allow export to Turkey and Europe. -------------- Turkey Offers Help -------------- ¶4. (SBU) Minister Guler urged Iraq to consider export of gas to Turkey for Turkish consumption, potential LNG processing at Ceyhan, and pipeline export to Europe. He stressed that Turkey's BOTAS could provide technical assistance and training on pipeline security, particularly for the oft-sabotaged Kirkuk-Ceyhan oil pipeline. TPAO offered a presentation on how Turkey could assist Iraqi gas development, emphasizing the company's previous experience in northern Iraq. The company noted that it had personnel and materials positioned in close proximity to Iraq, and deep geological knowledge of northern Iraq. The TPAO team estimated Iraq's proven gas reserves at 3 tcm, as well as potential reserves at 3 tcm. TPAO identified a number of promising regions: "Zone A" in the north comprising 500 BCM non-associated gas; "Zone B" in the north with 480 BCM associated gas; and "Zone C" in the south with 2000 BCM. TPAO worked with Shell in a 2004 study that concluded there was significant gas export potential. BOTAS stressed that Iraqi gas sources could be connected to the Turkish grid about 240 km from the border near Diyarbakir or there could be a new gas pipeline parallel to the Kirkuk-Ceyhan pipeline. BOTAS said they had great expectations for Iraqi providing up to 10 BCM of natural gas per year that could help fill the Nabucco pipeline to Europe. ¶5. (SBU) Iraqi rep Hunar Hassan stated that Iraq welcomed assistance from the U.S. and Turkey. Noting significant oil reserves of 115 billion barrels and ample reserves of gas, he said ANKARA 00000614 002 OF 002 that once security was attained Iraq was committed to attract investment to develop these resources. Hassan said the Iraqi government is focused on bringing the hydrocarbon law to completion, which he was confident would happen over the next few months. He said Iraq would need to rehabilitate existing power plants and rebuild the petroleum industry, which would require over $20 billion in investment. ¶6. (SBU) MFA Deputy Iraq Coordinator Murat Ozcelik stated that -- in order to move forward on cooperation on energy and other areas -- Turkey wanted to resolve its problems with Kurds in northern Iraq. He pointed out that he would be attending the P-5 plus neighbors meeting in Baghdad the following day. After Mr. Hassan indicated that he was an ethnic Kurd who observed harmony among Kirkuk's varied ethnic groups throughout his life, the MFA rep stated that Turkey needed to resolve its problems with the Kurds to assure a healthy relationship with Iraq. -------------- Next Steps -------------- ¶7. (SBU) Bryza suggested that the group forge the following topics into an action plan for trilateral cooperation: - Improving the investment climate, building on Iraq's new hydrocarbon law, (which parliament had not yet enacted); - Providing technical assistance and training for pipeline security; - Finalizing and implementing the national gas plan, with a focus on increasing production for both domestic consumption and potential export; - Cooperating on augmenting Iraq's electricity provision, including considering increased export from Turkey; - Assisting in developing a broader oil and gas pipeline network, including extensions to Turkey for export. ¶8. (U) The immediate next step is to coordinate drafting of an action plan, including identifying a date and location for a next meeting. Embassy will work with the Department and the Turkish Ministry to make this happen. ¶9. (U) This cable was cleared by EUR DAS Matt Bryza. Wilson