Identifier
Created
Classification
Origin
08BAKU867
2008-09-12 13:14:00
CONFIDENTIAL
Embassy Baku
Cable title:  

TURKISH ENERGY MINISTER FOCUSED ON IRAQI GAS FOR

Tags:  PGOV PREL AJ TU TX ENRG 
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C O N F I D E N T I A L SECTION 01 OF 02 BAKU 000867 

SIPDIS

STOCKHOLM FOR SE GRAY, AMB MANN.

E.O. 12958: DECL: 09/12/2018
TAGS: PGOV PREL AJ TU TX ENRG
SUBJECT: TURKISH ENERGY MINISTER FOCUSED ON IRAQI GAS FOR
SHORT-TERM SOLUTIONS

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

C O N F I D E N T I A L SECTION 01 OF 02 BAKU 000867

SIPDIS

STOCKHOLM FOR SE GRAY, AMB MANN.

E.O. 12958: DECL: 09/12/2018
TAGS: PGOV PREL AJ TU TX ENRG
SUBJECT: TURKISH ENERGY MINISTER FOCUSED ON IRAQI GAS FOR
SHORT-TERM SOLUTIONS

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


1. (C) Summary. In a September 9 meeting with Special Envoy

C. Boyden Gray, GOT Energy Minister Hilmi Guler stressed that
his focus was on solving Turkey's short-term gas needs.
Between Iraqi and Turkmen gas, Iraqi gas seemed a more
realistic option, and he sought USG help in ensuring that gas
from the Iraqi Aqqaz field would flow north to Turkey without
passing through Syria. He is seeking to "revive" the
existing 1998 gas Sales and Purchase Agreement with
Turkmenistan. He also offered to help the GOAJ and GOTX
solve bilateral delimitation on the disputed Sardar-Kyapaz
field, so the resulting gas, should there be a major find,
could go to Turkey. End Summary.


2. (U) On September 9 a USG delegation headed by Special
Envoy C. Boyden Gray met with GOT Energy Minister Hilmi Guler
to discuss regional energy concerns. Also present were (USG)
Eurasian Energy Coordinator Ambassador Steve Mann, Assistant
Energy Secretary Katharine Fredrikson, Ambassador Derse,
EnergyOff, (GOT) GOT Ambassador to Azerbaijan Hulusi Kilic,
Botas Director General Huseyin Saltuk Duzyol, Nabucco
Coordinator Osman Goksel, and Turkish Embassy Third Secretary
Akdemir (notetaker).


3. (C) SE Gray said he would be traveling to Turkey on
Monday, September 15 to participate in a USG-GOT working
group. One topic would be transit of Caspian gas through
Turkey to European markets. Turkey's energy security needs
are a significant issue, and the USG wants to help, to
include exploring all alternatives, especially Turkmen gas.

TURKEY NEEDS GAS


4. (C) Guler hoped that SE Gray would be able to complete his
efforts before the US Administration changes. Gray noted
that whoever wins the US Presidential election, the USG will
continue its regional energy policies. The Minister said
that he discussed energy the previous day with President
Aliyev. Turkey sees Iraq and Turkmenistan as good gas supply
sources, in addition to Azerbaijan, but developing these
various gas fields takes time.


GOT WANTS SHORT-TERM SOLUTIONS


5. C) Guler said he has visited Kazakhstan and Turkmeistan,
looking for a solution for Turkey's supplysecurity concerns,
and Turkmenistan looked the better option. However, there is
also the issue of transit security in Georgia, post-crisis.
Half of Turkey's gas use is to produce electricity, and
Turkey must find some way to reduce its "gas pressure."
Iran's cutting of gas to Turkey for 34 days in the winter
highlighted Turkish energy vulnerability. Turkey is 90
percent dependent on foreign gas (60 percent from Russia and
30 percent from Iran. While agreeing with the principle that
the long-term way to relieve Turkish gas supply and demand
imbalance was to find alternatives to gas (coal, nuclear,
wind) in addition to alternate sources of gas (expediting
Black Sea exploration, for example),Guler stressed that he
was concerned about the next five years - "we have to be
quick...we need to find short-term, effective solutions."
Turkey needs USG help and support in these efforts.


6. (C) Longer term, Turkey's goal is to halve its gas usage
within ten years, and it seeks to become an example of
renewable energy sources (nuclear and alternative energies),
seeking to sell electricity to its neighbors. Joint ventures
for energy sector construction in Turkey would be
inexpensive, due to cheap labor. Turkey might not need as
much gas if it uses solar and wind. However, although Turkey
will seek to use all alternatives power generation, Guler
said that "gas is critical for us."

IRAQI GAS


6. (C) Guler said Iraq was concerned about the directions gas
from the Iraqi Aqqaz field would flow, expressing a strong
preference that it flow directly north into Turkey, as
opposed to being routed to Turkey through Syria. Turkey
opposes gas transit via Syria, and a direct northern routing
would have greater supply security and would help establish

BAKU 00000867 002 OF 002


regional security in Kurdish Iraq.


7. (C) Botas Director-General Duzyol said that Turkey's main
energy problem was that "there was not enough gas ) we need
to attract maximum regional gas to Turkey." Iraqi gas was
more realistic and hence more appealing to Turkey than
Turkmen gas ) while he was optimistic about Iraqi gas in the
short-term, "I am not optimistic about Turkmen gas before
2020." Iraq has two promising fields in the North controlled
by the central government, in addition to two fields in the
Kurdish Regional Government area. If Iraqi gas goes through
Syria, Turkey will lose volumes in transit. Guler added that
when he spoke recently with Iraqi Energy Minister
Shahristani, the latter confided that he did not want a new
hydrocarbon law, preferring the status quo to continue.
Telling the GOT note-taker not to write this down, he said he
did not trust Shahristani, thinking him too close to Iran.

TURKMEN GAS


8. (C) Guler said the GOT goal was to "vitalize" the
existing, valid 1998 30-year gas Sales and Purchase Agreement
with Turkmenistan, 16 bcm/a of which would be for Turkey and
14 bcm/a for Europe. Implementing this contract would
therefore help meet EU gas supply demand. Duzyol explained
that this contract remains valid. Mmilestones which the GOTX
hasn't yet met would trigger its implementation.. The
delivery point could be the Georgian border, although when
mentioned to Berdimuhamedov, the latter repeated the GOTX
line that it sells its gas at its border. Guler said that
for this Turkish-bound Turkmen gas the GOT prefers a
cross-Caspian pipeline vice transit through Iran. Azerbaijan
could build such a pipeline, approximately 380 kilometers.
Conversely, GOT Nabucco Coordinator Goksel mused that a swap
deal might exchange TPAO gas in the Black Sea with GOTX
Caspian gas, and suggested that the USG "tell Petronas" to
sell Block One gas to Turkey to facilitate such a swap.


9. (C) Guler added that the GOT was interested in developing
"one or two other" Caspian GOTX blocks. The GOT needed to
"brainstorm," perhaps choosing to partner with Petronas in
developing Block One if Turkey had USG/GOTX support, with
Turkey sending its share west. A second possibility was the
Sardar-Kyapaz field, possibly with TPAO involvement - gas
from S-K "would be enough for us." Delimitation issues made
developing this field "problematic," but perhaps Turkey could
help GOTX-GOAJ solve delimitation. Azerbaijan could build
the 60 kilometer pipeline needed from S-K. Guler said that
the USG and GOT should combine efforts to help "convince the
Azerbaijani side" to renounce any/all S-K claims. In
speaking of the need to have major international companies
develop GOTX onshore as well as offshore, Guler posed the
question of whether it would be desirable to have Russian
companies participate in such development.


10. (C) COMMENT: Guler's focus on solving Turkey's
short-term gas needs to the exclusion of focusing on longer
term development could well result in lessened GOT gas
security. Although he did not take the hard line in this
meeting, SOCAR interlocutors tell us that he is still
insisting on eight bcm/a from Shah Deniz Phase Two instead of
the four being offered, even though such a tack might well
lead to the GOAJ not sanctioning Shah Deniz Two, giving
Turkey zero Caspian volumes. END COMMENT.


11. (U) SE Gray, Ambassador Mann, Energy A/S Fredriksen did
not have the opportunity to clear this cable.
DERSE