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

UNCLAS SECTION 01 OF 03 ANKARA 002803 
 
SIPDIS 
 
SENSITIVE 
 
USEU FOR MIKE MOZUR 
 
E.O. 12958: N/A 
TAGS: ENRG EPET ETRD IZ TU
SUBJECT: TURKISH MFA ON EU, IRAQ, BTC, AND BYPASSES 
 
REF: A. ANKARA 1003 
     ¶B. ANKARA 1991 
     ¶C. ANKARA 2380 
 
 ¶1.  (SBU)  Summary: A Turkish MFA official expressed 
concerns about continued lack of oil flow in the Iraq-Turkey 
pipeline, but optimism about potential for providing 
additional Turkish electricity to Iraq.  He explained that 
the GOT was unable to initial the draft of the EU's Energy 
Community Treaty that was presented to it on a 
take-it-or-leave-it basis by the European Commission, but 
that it had agreed to an offer by Commissioner Piebalgs to 
continue talking.  The GOT is eagerly looking forward to 
participating in the May 25 BTC "First Oil" ceremony in Baku 
and is still targeting first oil at the Ceyhan terminus in 
October-November 2005.  He also commented on nuclear energy, 
regional links, and Bosphorus bypass projects.  End Summary. 
 
¶2.  (SBU)  In a May 16 meeting with EconCounselor and Energy 
Officer, Turkish MFA DDG for Energy Mithat Rende covered a 
range of regional and domestic energy issues.  Rende asked 
for USG views on diversifying electricity links to Iraq to 
include from Syria and Iran.  He asked for USG support in 
ensuring that Iraq (Baghdad and KRG) were providing adequate 
protection to the Iraq-Turkey oil pipeline to restart oil 
flow to Ceyhan.  Please note requests for guidance in paras 
3, 4, and 8. 
 
Iraq - Where's the Oil? 
----------------------- 
 
¶3.  (SBU)  Rende lamented the continued lack of oil flow in 
the Kirkuk-Ceyhan pipeline, citing (at least) 16 serious 
sabotage incidents in 2004.  He said that he and MFA 
colleagues were coming to a conclusion that inability to stem 
the sabotage stemmed not from a lack of capacity on the part 
of the Iraqi authorities, but rather on a "lack of political 
will" on the part of Kurdish regional authorities.  We told 
Rende this sounded like a conspiracy theory, but said we 
would report those views.  Post would appreciate any 
information to rebut this assertion.  We note that much of 
the pipeline and presumably most, if not all, of the sabotage 
incidents are outside of the KRG controlled areas. 
 
Iraq - Electricity Linkages 
--------------------------- 
 
¶4.  (SBU)  Anticipating Prime Minister Jaafari's May 19 visit 
to Turkey, Rende said the GOT was looking at ways to provide 
additional Turkish electricity to Iraq.  He said there has 
not, however, been a decision on how to do this.  One option 
would be to expand the existing Kartet-Karadeniz agreement to 
provide 150 MW to northern Iraq, but Rende noted that there 
were domestic Turkish regulatory issues that needed to be 
addressed by the Turkish energy regulatory authority (EMRA - 
see ref A).  Rende asked if the United States would have any 
objection to sending Turkish electricity to Iraq via Syria. 
He also noted that Iran would be another potential source of 
electricity linkages to Iraq. 
 
South East Europe Energy Community Treaty - We are Serious 
--------------------------------------------- ------------- 
 
¶5.  (SBU)  Rende defended the GOT's recent decision not to 
initial the EU's Energy Community Treaty (newest version of 
South East Europe process).  He noted that the treaty was 
ambitious in targeting common markets in natural gas and 
electricity.  Rende said that Turkey was not prepared to 
accept the requirement of immediate implementation of 
environment and energy "acquis communitaires" as foreseen by 
the Treaty.  Rather, Turkey needed the longer time and 
gradual implementation contemplated in the EU accession 
process to implement the costly measures.  Furthermore, he 
objected to the negotiating approach of the European 
Commission, which had negotiated the draft with the existing 
member states and then it to Turkey on a take it or leave it 
basis,  He said that Commissioner Piebalgs had recently 
acknowledged that this was not an appropriate approach 
(Piebalgs claimed the EC negotiators had exceeded their 
instructions) and had offered to resume talks, which the 
Turks had accepted.  Rende noted that the Treaty made little 
sense without Turkey.  He said Turkey would not be able to 
support an Italian proposal to extend the purview of the 
treaty to the oil market. 
 
Nuclear Dreams 
-------------- 
 
¶6.  (SBU)  Rende reaffirmed the GOT's commitment to pursue 
building three nuclear power plants in order to diversify 
Turkey's energy mix, noting that Energy Minister Hilmi 
Guler's roll out of Turkey's intentions earlier this year had 
been well received.  He said that Turkey was discussing this 
project with German and French firms, but noted that U.S. 
firm Westinghouse had not approached the GOT to initiate 
discussions.  Rende noted that financing would be a major 
obstacle, but said that the European firms had suggested that 
financing could be available.  (Rende had not seen the 
details and was skeptical.) 
 
BTC First Oil in Baku - Concerns About Georgia 
--------------------------------------------- - 
 
¶7.  (SBU) Rende said that he was planning to accompany 
President Sezer and Energy Minister Guler to the BTC "First 
Oil" ceremony in Baku May 25, but that he had a potentially 
conflicting obligation in Brussels following his recent 
appointment as chair of an Energy Charter working group.  He 
was aware that the Embassy had submitted a diplomatic note 
requesting a meeting for Energy Secretary Bodman with the 
President and Minister.  In response to a question from 
Energy Officer, Rende lamented that Georgia had still not 
been responsive on approving the intergovernmental security 
protocol and designating a representative to the BTC IG 
Committee on Security.  He said the GOT would be willing to 
provide, but not fund, training or other security assistance 
to its partner countries.  He noted that Georgia was still 
making unreasonable demands with respect to security and 
environment in the Borjomi region and suspected it might have 
"other motives" for not moving on the security protocol. 
Rende said that the GOT still expected first oil tanker 
loading at the Ceyhan terminus October-November 2005 (Ref C), 
but hinted at the possibility of additional slippage. 
 
East West Energy Corridor - More Links 
-------------------------------------- 
 
¶8.  (SBU) The MFA official noted the importance of the June 
28 CERA Three Seas Conference in Istanbul and hoped for high 
level U.S. participation.  (Post would appreciate information 
on Ambassador Mann's plans.)  Rende cited the important link 
for the Turkey-Greece gas interconnector, which will be 
celebrated by a ceremony with the Prime Minister in June.  He 
also cited the emphasis of rail (Kars-Tbilisi-Baku) and road 
links.  Rende encouraged the USG to reinforce demarches to 
promote reconsideration of the Trans-Caspian Pipeline for 
natural gas from Turkmenistan.  He also noted that BOTAS was 
a little behind on initiating the Georgia-Erzurum spur to 
off-load the natural gas from the South Caucasus - Shah Deniz 
pipeline, but he noted that the GOT would satisfy its 
end-of-2006 2 bcm take-or-pay obligation (increasing to 6.5 
bcm in 2009). 
 
Bosphorus Bypass - Same Old 
--------------------------- 
 
¶9.  (SBU) Sounding like the old refrain, Rende said he was 
encouraged by interest in the (GOT preferred) Bosphorus oil 
bypass route of Samsun-Ceyhan, and said he expected a 
decision soon from the Council of Ministers expressing 
"support" (Ref B).  He noted that companies expected a more 
tangible expression of support from the GOT on behalf of 
Samsun-Ceyhan to allow them to do a comparative analysis with 
Burgos-Alexandropolos (factoring in Greek and Bulgarian 
promises of financial and other support).  Rende said an 
additional argument for Samsun-Ceyhan was that a Ceyhan 
terminus would be a veritable "oil supermarket," from which 
ULCC's could pick up and transport compartmentalized cargos 
of Kirkuk, Caspian, and Russian crudes without having to call 
at different ports.  He also lamented that there were 
competing sponsors for Samsun-Ceyhan (Calik Enerji, BOTAS, 
Zorlu, and Ekinceler), as well as for the Trans-Thrace 
project (Thrace Development Company- with U.S. Howard Lowe, 
Turkish Cukurova, and Kazakh interests; Anadolu group was 
still pursuing its "copy-cat" project, but now apparently 
without Transneft).  In separate meetings, a ChevronTexaco 
official confirmed to energy officer that it was redoing its 
numbers and it was looking closely at Burgos-Alexandropolos 
and what the Russian Companies were doing.  He repeated 
concerns about too much market reliance on Turkey (Ceyhan or 
Turkish Straits) for oil passage and the need for a 
comprehensive commercial approach to Bosphorus bypass(es). 
 
¶10.  (U) Baghdad Minimize Considered. 
EDELMAN