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

C O N F I D E N T I A L SECTION 01 OF 02 ANKARA 007656 
 
SIPDIS 
 
DOE FOR A/S HARBERT AND CHUCK WASHINGTON 
USDOC FOR ITA/MAC/CRUSNAK 
 
E.O. 12958: DECL: 12/27/2010 
TAGS: ENRG BEXP IR IZ TX AJ TU
SUBJECT: ENERGY MINISTER LOOKS FORWARD TO ENHANCED DIALOGUE 
 
REF: A. BAKU 1918 
     ¶B. ANKARA 6386 
 
Classified By: Ambassador Ross Wilson.  Reasons 1.4 (b) and (d). 
 
¶1.  (C)  Summary.  Seeing opportunities for cooperation on 
regional gas and oil projects as well as prospects for U.S. 
private investment in Turkey's fast growing domestic energy 
sector, Energy Minister Hilmi Guler looks forward to greater 
dialogue and cooperation with the United States on energy 
issues.  Guler told Ambassador December 22 he especially 
needs U.S. help deflecting EU and Iranian pressure to transit 
Iranian gas to Europe, and claimed that Turkmen and Iraqi gas 
projects were feasible alternative sources of supply to 
Europe via Turkey.  Guler also hopes for a negotiated 
solution to disputed BOT contracts with independent power 
producers, but said Turkey would act unilaterally if the 
companies did not negotiate in good faith.  Ambassador said 
he had spoken with DOE Secretary Bodman about attending the 
Baku-Tblisi-Ceyhan opening ceremony in Ceyhan in the Spring 
and about inviting Guler to launch a bilateral energy 
dialogue.  Ambassador stressed his interested in 
collaborating with Turkey on energy, reprising the historic 
success of our cooperation on Caspian energy and 
infrastructure development.  End Summary. 
 
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Minister Interested in Energy Dialogue 
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¶2.  (C)  Energy Minister Guler agreed with Ambassador that 
more dialogue and cooperation with the United States on 
energy issues would be useful for both countries.  He agreed 
that there was an opportunity to build on the success of the 
Baku-Tblisi-Ceyhan project and looked forward to welcoming 
Secretary Bodman at the inauguration of the Ceyhan terminal 
 
SIPDIS 
this Spring (he said the timing could be arranged to suit the 
Secretary's calendar).  Guler also hoped to accept the 
 
SIPDIS 
American Turkish Council (ATC) invitation to attend the ATC 
March 27-29 annual meeting in Washington.  If the Secretary 
is available, this would be a good time to launch a 
high-level energy dialogue.  Ambassador said that DOE's 
interest is to have a very concrete and practical dialogue. 
Guler replied that this is exactly what he wants, as well. 
 
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Alternatives to Iranian Gas for Europe 
-------------------------------------- 
 
¶3.  (C)  Guler said he needs U.S. support in order to 
continue to deflect European and Iranian pressure to transit 
Iranian gas through Turkey to Europe.  To do this would 
require developing Turkmen and/or Iraqi gas exports via 
Turkey.  Guler said convincing Niyazov to accept a 
Trans-Caspian pipeline was "not impossible" and perhaps 
easier than the U.S. thought.  Building a gas pipeline that 
followed the route of the existing oil pipeline from northern 
Iraq to the port of Ceyhan, where it could be liquified, was 
another option.  Guler said he could not hold out against the 
EU pressure "forever" and suggested that developing these 
alternatives would provide leverage with Iran on the nuclear 
issue. 
 
¶4.  (C)  Ambassador observed that countering Iran had been 
one of the main motivations for BTC and the South Caucasus 
Gas Pipeline projects, and we remain concerned about Iran. 
While he was uncertain about the prospects for Iraqi gas 
export, Ambassador described his own history with Niyazov and 
the trans-Caspian idea, concluding that further work for the 
foreseeable future seemed fruitless.  However, the Azeris had 
recently raised their Caspian gas reserve estimate and BP now 
believed it might have production volumes of up to 35 bcm or 
more (ref a).  Turkey should work with the companies and 
Azerbaijan to market this gas to Europe. 
 
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U.S. Support Needed for Samsun-Ceyhan Project 
--------------------------------------------- 
 
¶5.  (C)  Guler also said he needed U.S. support for the 
Samsun-Ceyhan oil pipeline project, which would provide a new 
outlet for Russian and Central Asian oil that would bypass 
the congested Turkish Straits.  He said the Straits had 
reached its capacity limit and that an accident in Istanbul 
would be devastating not only for the city, but for global 
oil security.  Russia, Guler said, had finally understood the 
need for Straits bypasses, but that it is supporting the 
Bulgaria-Greece route.  Samsun-Ceyhan, however, offered a 
safer route since it avoided the sensitive Aegean.  He agreed 
with Ambassador that the project would have to be 
commercially viable.  He said that U.S. oil companies' 
ability to provide throughput commitments is essential and 
asked for any help the U.S. Government can provide. 
 
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U.S. Investment in Domestic Energy Sector Welcome 
--------------------------------------------- ---- 
 
¶6.  (SBU)  Guler said he looks for greater U.S. involvement 
in Turkey's domestic energy sector.  He is aware of and 
welcomes the interest of U.S. firm AES in the planned 
privatization of the electricity distribution system.  He 
said he would similarly welcome U.S. interest in Turkey's 
planned civilian nuclear generation program, the details of 
which will soon be announced.  In response to the Ambassador, 
Guler said he also welcomes U.S. companies' input into the 
design of specifications and other technical details of 
tender documents.  He noted that there were many other 
projects on the drawing board that could interest U.S. 
companies, but said budget spending limitations agreed with 
the IMF put these projects on hold.  (This may be a reference 
to stalled hydropower projects under the U.S.-Turkey 
protocol.) 
 
¶7.  (SBU)  Finally, Guler said he needs to negotiate changes 
to the electricity tariffs in BOT contracts that the GOT 
signed with independent power producers on "unfavorable 
terms" before the 2001 financial crisis.  He said the 
companies involved were willing to change the contracts, but 
that their foreign creditors and insurance companies were 
objecting.  He agreed with Ambassador that a negotiated 
settlement was in Turkey's best interest, but added that if 
this was not possible Turkey would take action in accordance 
with its laws and regulations.  The Presidency and the Court 
of Accounts have prepared confidential reports of 
improprieties in the negotiation of the contracts that, Guler 
said, he would prefer not to have to make public. 
WILSON