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