PRESIDENT GUL TELLS SECRETARY BODMAN OF SOUTHERN

C O N F I D E N T I A L SECTION 01 OF 02 BAKU 001147

SIPDIS

E.O. 12958: DECL: 12/02/2018
TAGS: PGOV PREL AJ TU ENRG
SUBJECT: PRESIDENT GUL TELLS SECRETARY BODMAN OF SOUTHERN
CORRIDOR SUPPORT

Classified By: Ambassador Anne E. Derse, Reasons 1.4 (b,d)


1. (C) SUMMARY: In a November 13 meeting with President Gul,
Energy Secretary Bodman stressed U.S. support for the region
and the Southern Corridor, with Gul expressing appreciation
for USG support and noting its importance to future projects.
Gul indicated that Turkey and Azerbaijan are close to a
transit agreement and that both countries are engaging with
Turkmenistan to hold a leaders, meeting there soon. Gul
reiterated that Turkey prioritizes providing energy to Turkey
first and then supplies to Europe. Gul sought USG,s help on
engaging Iraq in projects and serving as a transport country
for Iraqi gas to go west. END SUMMARY.


2. (C) On November 13 Energy Secretary Samuel Bodman met with
Turkish President Abdollah Gul. Other USG participants
included Special Envoy C. Boyden Gray, Ambassador Derse, EUR
DAS Matthew Bryza, DOE Director of Russian and Eurasian
Affairs Lana Ekimoff, and DOE Chief of Staff Adam Ingols.


3. (C) Turkish President Gul said this Energy Summit's agenda
was broader than the three previous Summits and that he
wanted to include Turkish projects. He went on to note the
close energy relationship that Turkey has with the U.S.,
especially in recent years. He explained that Turkish energy
policy priorities are first to secure its own energy supplies
and second to contribute to Europe,s energy supplies.
Turkey has limited sources of energy noting Russia, BTC, and
Baku-Tbilisi-Erzerum. Turkey is working on natural gas
pipelines and diversifying its sources of gas with the aim of
reducing its dependence on Russian gas. Bodman encouraged
the President not to be dependent on any one source.

EUROPE'S GAS SUPPLIES


4. (C) Gul said it wasn't true that Turkey does not attach
importance to getting gas supplies to Europe. Turkey
supports the Nabucco pipeline, whose strategic importance
justifies its initialization, even with low volumes of gas.
If the pipeline is started, additional volumes will come. He
recognized that there are political problems with the
pipeline but pushed for its realization, noting that BTC,s
first days were called a dream.

REGIONAL GAS SUPPLIES


5. (C) Gul noted that Azerbaijani gas would not be sufficient
to meet all of Turkey,s needs; therefore, it is important to
engage with Turkmenistan and to pursue its gas for
cross-Caspian export. Over the last year, Turkey has been in
constant contact with Turkmenistan and Azerbaijan.
Azerbaijan and Turkmenistan have some political issues but
emphasized the importance of all three countries working
together. Turkey is planning for a meeting soon with all
three countries/leaders, and initially wanted the meeting in
Turkey but now supports going to Turkmenistan (NOTE: This
trilateral HOS meeting will take place November 28-29 in
Ashgabat. END NOTE). President Aliyev plans to travel to
Turkmenistan a day ahead of the meeting of the three,
indicating the significant gesture being made by Aliyev. The
talks will include the possibility of an understanding to
connect Turkman and Azerbaijan infrastructure in the Caspian.
Gul cautioned the need to be sensitive to the issue and to
keep it close hold. He raised the recent reserve figures
announced by Turkmenistan as a result of the Gaffney-Cline
audit. The audit helps to assure Turkmen President
Berdimukhamedov,s promise of providing 10 bcm to Turkey, but
Gul again called for patience in dealing with the Turkmen.

IRAQ


6. (C) Gul began the discussion on Iraq by stating his
support for President Bush and the fight to combat terrorism.
He talked about the importance of developing Irqi oil and
gas resources to send west through Turey. He sought strong
USG support for Turkey to elp develop Iraqi fields,
stressing that this is important for European supply. Energy
Minister Guler said that Turkey wants to form a joint venture
with Shell to develop a plan to work in Iraq. TPAO plans to
bid on six fields with Shell and Japanese companies. Turkey
is considering a constructing a pipeline parallel to the
Kirkuk-Ceyhan oil pipeline.


BAKU 00001147 002 OF 002


POTUS LETTER


7. (C) Gul expressed gratitude for the President,s letter to
him. He especially appreciated that it recognized Turkey,s
needs and affirmed U.S. readiness to assist Turkey in meeting
its needs. Bodman noted that a delegation already met with
Turkish officials and that he and Minister Guler had talked
about possible cooperation on clean coal technology and
renewable energy. Guler noted that discussion with the U.S.
delegation helped identify ways to reduce Turkey,s gas
demand. Gul again reiterated the need for USG support to
realize projects and without it would be difficult.

GOT-GOAJ GAS AGREEMENT


8. (C) Energy Minister Guler said that a conclusion has
almost been reached with Azerbaijan on current gas purchases.
He said that Turkey is prepared to pay "market prices" for
gas. BP and Statoil are demanding $400 per thousand cubic
meters. Turkey is currently paying $130 to $140 per mcm for
Azerbaijani gas supplies.


9. (C) COMMENT: As in previous meetings with USG
interlocutors, President Gul made all the right statements
about supporting the Southern Corridor. Somehow however,
these general statements of support have not been translated
into concrete implementing action by Energy Minister Guler or
Botas President Duzyol, and many here in Azerbaijan are
convinced that there will be no deal on transit until and
unless Gul (or Erdogan) orders Guler to make it happen.
According to our Azerbaijan interlocutors, Azerbaijan came
close to such a deal during the Baku Energy Summit (septel),
with Guler backing out at the last minute (doubtless the
Turkish version of events differs). It is still unclear
whether there was substantial progress towards resolving
transit during last week's trilateral meeting among Gul,
Aliyev and Berdimuhamedov in Ashgabat, although initial
indications are that there wasn't. As a European diplomat
who recently served as Ambassador to Turkey told the DCM in a
meeting today, it is likely that Turkey will continue to
"bargain hard" with Azerbaijan on gas supplies, waiting until
the last minute before seeking to eliminate the Southern
Corridor barriers. END SUMMARY.


10. (U) Secretary Bodman has cleared this cable.
DERSE