VZCZCXRO7214
RR RUEHAG RUEHDA RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA RUEHLN RUEHLZ
RUEHROV RUEHSR RUEHVK RUEHYG
DE RUEHAK #1705/01 0891429
ZNR UUUUU ZZH
R 301429Z MAR 06
FM AMEMBASSY ANKARA
TO RUEHC/SECSTATE WASHDC 4417
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RHEBAAA/DEPT OF ENERGY WASHINGTON DC
RHEHAAA/NSC WASHDC
RHMFISS/HQ USEUCOM VAIHINGEN GE
RUEUITH/ODC ANKARA TU//TCH//
RUEHIT/AMCONSUL ISTANBUL 0191
RUEHDA/AMCONSUL ADANA 0581

UNCLAS SECTION 01 OF 02 ANKARA 001705 
 
SIPDIS 
 
USDOC FOR 4212/ITA/MAC/CPD/CRUSNAK 
DOE FOR CHARLES WASHINGTON 
 
SENSITIVE 
SIPDIS 
 
EUR ALSO FOR DAS BRYZA AND MANN 
 
E.O. 12958: N/A 
TAGS: EPET ENRG EINV TU IR
SUBJECT: TURKEY: BTC OIL ADVANCES - ERZURUM AS ENERGY CROSS- 
ROADS 
 
REF: ANKARA 1527 
 
ANKARA 00001705  001.2 OF 002 
 
 
Sensitive But Unclassified.  Please Handle Accordingly. 
 
¶1.  (SBU) SUMMARY:  With first oil at Pump Station 3, BTC is 
still on track for first tanker loading at Ceyhan on May 27. 
The project has achieved good "buy-in" from the local 
population from jobs and its community programs.  Nearby 
major city Erzurum hopes to benefit more from development as 
an energy transit cross-roads, but its rigorous conditions 
leave it very dependent on state support.  End Summary. 
 
-------------------------------- 
BTC Pump Station Three Goes Live 
-------------------------------- 
 
¶2.  (SBU) Energy Officer visited BTC Pump Station Number 3 
(PT3) near Erzincan, Turkey on March 24.  The station was 
astir with arrival of first oil only a few days before on 
March 20 (substantially on current schedule for first tanker 
load at Ceyhan on May 27).  BOTAS Station Manager Murat 
Erkan took Energy Officer through the "red zone" (pumping, 
piping, and scraping facilities), under higher security 
procedures now that the facility had gone "live".   He 
showed the two newly arrived "pigs" (pipeline testing units) 
that had preceded the first oil, noting how little visible 
wear and tear were evidenced after the journey from PT2. 
Hot testing of the relief facilities, pipe valves, engines, 
etc was underway with a target of sending oil onwards on 
April 4.   He said operation of Pump Stations 1 and 3 would 
be adequate for initial levels of BTC pipeline oil flow. 
 
¶3.  (SBU) The PT3 manager insisted that relations were good 
between BOTAS (prime contractor) and the BTC consortium 
(owner, represented by BP) at the site.  On the subject of 
disputed cost over-runs between BTC and BOTAS, a BOTAS 
contact called Energy Officer during his visit and 
complained about BP leaking confidential negotiations to USG 
officials.  He expressed hope for reaching an agreement, but 
noted that BOTAS was preparing for potential international 
arbitration on covering $334 million in cost overages 
related to delays and (what BOTAS argues are) scope changes 
(Ref). 
 
¶4.  (SBU) Energy Officer was impressed with visible security 
and safety at the PT3 site.  The mountain-top station was 
surrounded by watch-towers, two perimeter fences, and an 
inner fence securing the red zone.  Unlike at PT1, the 
gendarmerie station was not adjacent to the station, but the 
gendarmerie had established its camp at a nearby village. 
 
------------------------- 
Erzurum: Look Hard at BTC 
------------------------- 
 
¶5.  (SBU) Erzurum (Eastern Turkey's nearby regional center) 
officials and interlocutors were uniformly positive about 
BTC, although some university students were skeptical of the 
value of transit to Erzurum and Turkey.  Officials and 
university professors were unanimous in recognizing that BTC 
brought significant present and future benefits in fees, 
regional linkages, and experience for the GOT and BOTAS. 
PT3 has brought significant construction employment, 
schools, and other social/education benefits to local 
villagers.  Many Erzurum trades-people confused BTC with the 
municipal natural gas distribution project, contracted to 
Turkish Palen Company.   Chamber of Commerce President 
Muammer Cindiller told Energy Officer that although the 
connections to natural gas were behind schedule, there was 
already improvement in the vexing problem of pollution as 
gas replaces the imported dirty Russian coal.  He admitted 
that people readily accepted gas for cooking, but were 
worried about price of gas for heating. 
 
¶6.  (SBU) Deputy Mayor Eyup Tavlasoglu noted that people 
supported the arrival of BTC, but it was hard for the 
consortium to meet all their raised expectations for jobs 
and benefits.  Officials were also optimistic about the 
connection of the South Caucasus (gas) Pipeline to the 
 
ANKARA 00001705  002.2 OF 002 
 
 
Turkish grid at Erzurum (also the connection for the spur 
from Iran), noting that Erzurum was developing as a regional 
energy cross-roads.  The Chamber President advocated the 
idea of a refinery in Erzurum which could use BTC oil and 
serve eastern Turkey (Energy Officer politely pointed out 
that the consortium would probably not be interested in that 
business investment). 
 
--------------------------------------------- -------- 
Erzurum's Dependency on the State - Tourist Ptential 
--------------------------------------------- -------- 
 
¶7.  (SBU) Officials lamented Erzurum's natural challenges: a 
long, rigorous winter and general lack of development in 
Turkey's east, expressing a dependency on the state to help 
Erzurum, because the private sector was generally unable to 
establish investment feasibility.  The Chamber President 
listed Erzurum's main endowments as the 40,000 student 
Ataturk University, its research hospital (which had treated 
suspected avian influenza cases in January, of which there 
was one confirmed case), and the separate state and private 
hospitals.  University officials were hopeful that Erzurum 
could gain a future Winter Universiades competition, 
leveraging the proximate, world-class skiing, with the need 
for state support to increase skating facilities.   The 
University Hospital avian influenza expert advocated outside 
support to establish a testing lab in Erzurum.  All 
officials touted Erzurum's ski center, located only 8 km 
from the city, and now catering mainly to Russian tourists. 
 
-------------------- 
No Iranian Influence 
-------------------- 
 
¶8.  (SBU) All Erzurum interlocutors were unanimously 
insistent that there was not significant Iranian influence 
in Erzurum.  The Deputy Mayor pointed out that the Iranian 
Consulate (only diplomatic representation in the city) was 
opened during the time of the Shah when there was more 
bilateral commerce and Iranian tourists.  All officials said 
the consulate was now low profile and barely open.  In 
response to Energy Officer's observation of a minority of 
older women clad in apparent chador-burka style full body 
covering garb, officials claimed that these were not at all 
related to Iran; rather, these were remnants of Erzurum's 
traditional "ehram" attire, suitable for the cold and wind 
(but only used by women).  All officials emphasized the big 
cultural and religious differences between Sunni Erzurm and 
Shia Iran that militate against Iran having significant 
influence. 
 
----------------------------- 
Tough Crowd at the University 
----------------------------- 
 
¶9.  (SBU) Energy Officer addressed a standing room crowd of 
about 250 students from a variety of departments at Ataturk 
University on "East-West Energy Corridor; Erzurum Connects 
to the Global Economy".  Students asked tough questions that 
indicated great skepticism about U.S. policy in Iraq and the 
Middle East and with respect to Iran.  Students in Erzurum 
appear to have the same concerns on these issues exhibited 
elsewhere in Turkey.