IRAQ ATTENDING ISTANBUL TRILATERAL GAS TALKS;

C O N F I D E N T I A L BAGHDAD 003250

SIPDIS

USDOE FOR PERSON

E.O. 12958: DECL: 10/08/2018
TAGS: PREL EPET ENRG TU IZ
SUBJECT: IRAQ ATTENDING ISTANBUL TRILATERAL GAS TALKS;
WANTS MEETINGS COMBINED

REF: A. BAGHDAD 3241

B. ANKARA 1680

Classified By: EMIN Ambassador Marc Wall, reasons 1.4(b,d)


1. (C) Oil Minister Husayn al-Shahristani assured EMIN Wall
October 6 that a Ministry of Oil (MoO) Director General would
attend the October 12 U.S.-Turkey-Iraq trilateral meeting on
natural gas in Istanbul. He noted that, in general, the
process of consultations with Turkey needed to be
streamlined. GoI officials seemed to be in meetings with
Turkish participation nearly every second month, even though
subjects for discussion were not that extensive. In addition
to the tripartite gas talks that coordinated Iraq's natural
gas supplies to Turkey, Shahristani listed several other
regular meetings -- one with Turkey, Syria, and the EU on the
Arab Gas Pipeline; another meeting among Iraq, Turkey, Iran,
and Syria; and the Neighbors' Process Working Group on
Energy. These discussions somehow need to be combined into
one platform, Shahristani commented.


2. (C) Reviewing the list, Shahristani observed that Iraq's
bilateral issues with Turkey seemed largely resolved.

-- Turkish company TPAO had been qualified to participate in
a first licensing round (note: which includes the Akkaz and
Mansuriya gas fields, ref A),although TPAO did not have the
capability to develop the fields by itself, so would be
encouraged to partner with a major international oil company.

-- Furthermore, Iraq's refined petroleum product imports from
Turkey had been suspended in 2007, due to corruption in the
Kurdistan Regional Government, which had led to demands for
Iraq to pay for product that had not been delivered. In
2009, Shahristani said he hoped that there would no longer be
any need to import refined product from Turkey.

-- Finally, Iraqi exports of heavy fuel oil (HFO) to Turkey
were proceeding satisfactorily, with any issues simple
contractual matters between Turkey and the State Oil
Marketing Organization (SOMO).


3. (C) Shahristani said he understood European and U.S.
interest in having Iraq supply natural gas to Europe. He
supported such a project, so that Iraq could benefit both
commercially and politically. First, however, Iraq had to
develop its natural gas supplies, which was why he had put
the Akkaz natural gas field into the first bidding round.
Otherwise, Iraq had no pressing need of its own to develop
the field, since it was in a desert area with a low
population and no particular need for electricity generation.
(Note: An additional motivation to develop the field is PM
Maliki's agreement with Syria to supply the field's gas to
Syria. End note.)


4. (C) Comment: We understand now that Oil Pipeline Company
Director General Salah Aziz Karim will attend the trilateral,
as might State Oil Marketing Organization Director General
Falah al-Amiry. At the MoO working level and despite
Shahristani's polite language, we have heard that Shahristani
has told his subordinates the trilateral should instead
become an Iraq-Turkey bilateral meeting. We recommend
Washington consider replacing the trilateral with a broader
gas forum that could include the U.S., the EU, Turkey and a
number of Iraq's other neighbors. End comment.

CROCKER