TURKEY SEEKS TO EXCLUDE IRAQI GAS FROM THE NABUCCO

UNCLAS BRUSSELS 000732 SENSITIVE SIPDIS E.O. 12958: N/A TAGS: ECON EPET EUN IZ TU SUBJECT: TURKEY SEEKS TO EXCLUDE IRAQI GAS FROM THE NABUCCO IGA Sensitive but Unclassified - not for Internet distribution. ¶1. (SBU) On May 27 Econ Officer spoke with a European Commission official involved with the Nabucco Intergovernmental Agreement (IGA) negotiations, about the status of the IGA. The official was quite concerned over the state of negotiations. He said that negotiations had taken a turn for the worst with most recently Turkey requesting that the Iraq entry point be taken out of the agreement. The EU views a prospective Iraq entry point as essential for Nabucco (because of the potential gas supplies from Kurdistan) and as adding to Iraq's stability by providing an outlet for their gas. According to the official, the Turks now prefer to work any gas export agreement with Iraq on a bilateral basis only and don't want an entry point from Iraq included in the Nabucco IGA. The official considers this to be a huge setback to the negotiations. ¶2. (SBU) The official also confirmed that Turkey has reasserted its 15 percent off-take demand as part of the IGA negotiations -- a subject which has long been a red line for the EU. He also said the Turks are now talking about needing more time to consider the IGA, despite their recent agreement at the Prague Summit to sign the agreement this June. According to the official, the 15 percent demand is coming from the new Turkish Energy Minister Yildiz, but both the Energy Minister and the MFA are talking about needing more time. Turkey is currently talking about putting a decision on the IGA off until September (not publicly announced yet). The official said the EU doesn't understand the reason for the delay and that they don't buy Turkey's proffered excuse that Turkey needs more time because of the new Energy Minister just being put in place. ¶3. (SBU) From the EU side, the official said all of the European partners would be ready to initial the IGA this Friday, May 28, if the Turks would agree. He said that the Commission would appreciate any assistance the USG could render in persuading Turkey on the issues of the entry point from Iraq, the 15 percent off take, and keeping to the June schedule for the IGA. The Commission would also appreciate any guidance or suggestions from Washington on how to proceed. Murray .