This record is a partial extract of the original cable. The full text of the original cable is not available.

201103Z Jul 04

UNCLAS SECTION 01 OF 02 ANKARA 004009 
 
SIPDIS 
 
SENSITIVE 
 
USDOC FOR 4212/ITA/MAC/OEURA/CPD/DDELFALCO 
USDOC FOR ADVOCACY CENTER SAM NEWMAN 
 
E.O. 12958: N/A 
TAGS: ENRG EPET PREL TU
SUBJECT: TURKEY:  MFA SEEKS CONSENSUS OF OIL COMPANIES ON 
BYPASS PIPELINE 
 
REF: A. STATE 73545 
 
     ¶B. ISTANBUL 262 
     ¶C. ANKARA 1542 
     ¶D. ANKARA 2071 
     ¶E. ANKARA 2721 
     ¶F. ANKARA 3419 
 
This is an action request.  See para 6.  Sensitive but 
Unclassified 
 
SIPDIS 
 
¶1.  (SBU) Summary:  Turkey's MFA continues to oppose issuing 
licenses now to the companies that have applied for Turkish 
Straits bypass pipeline routes through Turkey.  Instead, the 
Ministry wants to forge a consensus among the oil companies 
on "Voluntary Principles" to reduce their traffic in the 
Straits and choose a bypass.  The MFA will host a meeting 
July 23 with interested oil companies to seek agreement on 
the Voluntary Principles and has asked embassy to attend.  At 
the same time, a U.S. company has asked our help to get its 
bypass license approved.  End Summary. 
 
BYPASS APPLICATIONS 
------------------- 
 
¶2.  (SBU) MFA DDG for Energy Hakki Akil told Econ Counselor 
and Econoff July 12 that he opposed issuing licenses to the 
companies seeking to build oil pipelines to bypass the 
Bosphorus.  Instead, Akil explained, oil companies 
transporting Russian and Caspian crude via the Turkish 
Straits should agree together on which bypass they want to 
use.  This is the first time that Akil has explicitly stated 
his opposition to the application of Thrace Development 
Corporation to build a bypass pipeline across the Thrace 
isthmus.  His remarks confirm Minister Guler's statement to 
Ambassador Mann that the Energy Ministry's recommendation to 
approve the license application of Thrace Development 
Corporation was being blocked by the MFA.  Thrace first 
submitted its license application a year ago.  Thrace has 
filed with the Department of Commerce Advocacy Center and has 
asked that the Embassy/USG arrange a meeting with senior 
U.S., Turkish MFA and Thrace officials to clear the air and 
state the U.S. position of support for its application.  Post 
also knows of one other consortia, which includes American 
companies, that will likely ask for our advocacy support in 
the near future. 
 
¶3.  (U) Drawing on guidance in ref a, econoff responded that 
it is the U.S. position that market forces should determine 
the optimal bypass routes.  Therefore, we believe the Energy 
Ministry's approach to issue a conditional license to Thrace 
Development Corporation -- and other applicants -- made 
sense.  The conditional licenses would require the companies 
to demonstrate within six months that they have financing, 
throughput contracts and that they have completed 
environmental impact assessments.   This procedure ensures 
that the companies bear the risk and demonstrates that oil 
shippers will use the pipeline -- avoiding the Odesa-Brody, 
to which Akil alluded. 
 
Voluntary Principles Meeting 
---------------------------- 
 
¶4.  (U) Akil's approach is linked to the MFA initiative to 
bring the oil shippers together to agree on Voluntary 
Principles that would commit the companies to reduce their 
traffic through the Turkish Straits.  Akil said the UK 
government has expressed its support for the proposal and 
that a meeting with oil companies is scheduled for July 23 in 
Istanbul to try to reach agreement on the Voluntary 
Principles.  A Chevron-Texaco official who will attend the 
July 23 meeting told us that he thinks the Voluntary 
Principles are a good idea; however, he was skeptical that 
the Russian companies would join a consensus anytime soon. 
Subsequent to our July 12 meeting, Akil invited an embassy 
representative to attend, "to explain U.S. support for the 
Voluntary Principles." 
 
¶5.  (SBU) We are concerned that the bypass projects will be 
held hostage to Akil's desire to achieve a comprehensive 
agreement (the Voluntary Principles) that would commit the 
oil shippers to reduce use of the Straits and endorse 
specific bypass routes.  We have reported the concern of 
Western oil companies about the Voluntary Principles and 
their skepticism that Russian oil companies will agree to 
sign on to the deal or honor their commitments.  Less than 
100 percent participation would provide a large bonus for 
companies that remain outside the deal. 
 
¶6.  (SBU) Action Request:  It is becoming clear that the MFA 
can and will continue to block the Thrace license as long as 
it continues promoting the Voluntary Principles -- a process 
that could go on for quite some time.  Embassy requests 
Washington's guidance on attending the July 23 meeting.  In 
addition to lending our implicit endorsement of a non-market 
approach, our attendance could undermine our advocacy on 
behalf of Thrace Development Corporation.  As long as talks 
on the VPs continue, MFA is certain to hold up approval for 
Thrace's license.  We should also understand that overcoming 
MFA's opposition to Thrace's application will be difficult 
and will likely require U.S. intervention at a fairly senior 
level. 
DEUTSCH