TURKEY REQUESTS USG SUPPORT FOR NORTHERN IRAQ GAS

C O N F I D E N T I A L SECTION 01 OF 02 ANKARA 001680

SIPDIS

EEB FOR A/S SULLIVAN
SPECIAL ENVOY FOR EURASIAN ENERGY GRAY
EEB FOR ENERGY COORDINATOR MANN
EUR FOR DAS BRYZA

E.O. 12958: DECL: 09/22/2018
TAGS: ENRG EPET IZ TU
SUBJECT: TURKEY REQUESTS USG SUPPORT FOR NORTHERN IRAQ GAS
ROUTE TO TURKEY

REF: ANKARA 1679

Classified By: DCM Doug Silliman for reasons 1.4 (B) and (D)


1. (C) As part of the first U.S.-Turkey Energy Working Group
held in Ankara on September 15, Special Envoy for Eurasian
Energy C. Boyden Gray and DAS Matt Bryza discussed Iraq
energy issues with the GOT. Caspian energy issues reported
septel. Gray and the head of the Turkish delegation MFA
Deputy Undersecretary for Economic Affairs Selim Kuneralp
agreed Turkey and the U.S. should work together to bring
Iraqi gas to Europe as soon as possible. Kuneralp asked for
U.S. support for a northern export route for Iraqi gas to
Turkey. The next meeting of the U.S.-Turkey-Iraq natural gas
trilateral will be held in Istanbul sometime between Oct
11-14. Exact date for the trilateral will depend on
availability of Iraqi participants.


2. (C) Gray said Iraqi politics complicate investment in
Iraqi gas but that the U.S. wants to work with Turkey to get
it developed. Turkey's priority is to build a gas line
parallel to the existing Kirkuk-Yumurtalik oil pipeline that
would export Iraqi gas north. Turkey's Special Envoy for
Iraq Ozcelik said the situation in Iraq is more confused than
ever. We are entering a new phase in the power struggle
between the players. PM Maliki is trying to regain the upper
hand by appointing his advisor Thamir Ghadban to head a
committee comprised of the Ministries of Oil, Electricity,
Planning and Finance to develop a National Energy Strategy.
Meanwhile, Oil Minister Shahristani continues to be
influenced by the Iranians and will only offer service
agreements, rather than production sharing agreements, to
foreign companies working in Iraq's oil and gas sector.
Ozcelik doubted that there will be e would be a hydrocarbon
law any time soon. Turkey's objectives in Iraq are (1)
getting new gas; (2) maintaining good relations with KRG and
Baghdad while keeping open the door to future TPAO contracts
in Iraq; and (3) working toward KRG-Baghdad rapproachement.


3. (C) Turkey's strategy is to pull Iraqi gas north, but has
gotten the impression that Iraq and the U.S. want Iraqi gas
to be exported through Syria. Gray said that, given U.S.
political problems with Syria, the U.S. does not support
shipping Iraqi gas through Syria, but might not be able to
prevent such shipments if the Iraqi government strongly
desired them.


4. (C) The best chance for Iraqi gas through Turkey to
Europe, Ozcelik argued, is Dana gas, a company affiliate of
Crescent Petroleum (Iraqi-owned),with some support of Inci
Natural Gas (Turkish-owned). Dana gas will develop two
fields in Sulaymaniyah and provide gas to the KRG for
electricity production. According to Ozcelik, gas from these
fields could be ready in two years and estimates for plateau
production are 15-20 bcm, of which the no more than 6 could
be absorbed by the KRG. Ozcelik speculated a pipeline from
these fields to Erbil was almost complete and that a pipeline
from Erbil to Turkey (160 km),would make this route
preferable to connecting Akkas field to the Iraqi-Turkey
border. Ozcelik emphasized that this was still a raw idea
and that we would need to work with PM Maliki to convince him
of the utility of an northern export route. He added Iraq is
also planning an LNG terminal for Basra that would compete
for Iraqi gas available for export. Ozcelik said he plans to
meet soon with KRG President Massoud Barzani soon to discuss
a range of issues, including Dana gas.

U.S.-Turkey-Iraq Natural gas trilateral
--------------


5. (C) Both sides agreed to work through their respective
embassies in Baghdad to attract high-level participation to
the next meeting. Turkey has proposed to the Iraqi
Government the possibility of hosting the Neighbor's Process
Energy Working Group in Istanbul either Oct 11-12 or Oct
13-14. The U.S.-Turkey-Iraq natural gas trilateral would be
held on the margins of that meeting. These dates are
designed as a follow-on to a conference that Turkish

ANKARA 00001680 002 OF 002


Petroleum will host in Antayla Oct 8-10.


6. (U) This cable has been cleared by SE Gray and DAS Bryza.

Visit Ankara's Classified Web Site at
http://www.intelink.sgov.gov/wiki/Portal:Turk ey

WILSON