VZCZCXRO9614
RR RUEHDA
DE RUEHAK #4481/01 2151459
ZNR UUUUU ZZH
R 031459Z AUG 06
FM AMEMBASSY ANKARA
TO RUEHC/SECSTATE WASHDC 7674
INFO RUCPDOC/USDOC WASHDC
RHEBAAA/DEPARTMENT OF ENERGY WASHDC
RUEHAH/AMEMBASSY ASHGABAT 1908
RUEHTA/AMEMBASSY ALMATY 2224
RUEHTH/AMEMBASSY ATHENS 7335
RUEHGB/AMEMBASSY BAGHDAD 0705
RUEHKB/AMEMBASSY BAKU 1403
RUEHDM/AMEMBASSY DAMASCUS 1543
RUEHSI/AMEMBASSY TBILISI 3055
RUEHDA/AMCONSUL ADANA 0987
RUEHIT/AMCONSUL ISTANBUL 1042

UNCLAS SECTION 01 OF 02 ANKARA 004481 
 
SIPDIS 
 
USDOE FOR CHARLES WASHINGTON 
USDOC FOR 4212/ITA/MAC/CPD/CRUSNAK 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ENRG EPET ASEC EINV SENV EWWT TU IZ
SUBJECT: KILLING DETERS CHEVRON IN SE TURKEY 
 
REF: 05 ADANA 220 
 
Sensitive But Unclassified.  Please handle accordingly. 
 
¶1.  (SBU)  SUMMARY: Having long struggled to gain security 
permission for access to do a seismic survey on its petroleum 
exploration permit near Silopi on the Iraqi border, Chevron has 
overcome one obstacle after another, but the recent death from an 
improvised explosive device (IED) of one of its security firm's 
employees has caused it to abandon operations there.  Chevron still 
aims to avoid pursuing full "force majeure" under its contract, 
planning for its French partner Perenco to do some drilling in a 
relatively safer area.  Chevron admits that the geology is not 
overwhelmingly promising, but hopes to maintain good relations with 
the GOT and wants to gain geological information that might be 
relevant for more promising terrain across the Iraqi border - for 
the day when there is more clarity on doing oil business in northern 
Iraq.  End Summary. 
 
--------------------------------------------- ------- 
Quest for SE Turkey Access - Northern Iraq Potential 
--------------------------------------------- ------- 
 
¶2.  (SBU) Approximately two years ago Chevron officials told us that 
it aimed to resume exploration operations on an old permit in the 
Cudi Mountains near Silopi and Sirnak on the Iraqi border.  The GOT 
had lifted "force majeure" provisions under the contract associated 
with PKK violence in the area and Chevron had limited time in which 
to show exploration investment under the contract.  Later, Chevron 
approached the Embassy for assistance in gaining permission for 
access, apparently held up by the Turkish General Staff (TGS) for 
security concerns.  In 2005 Chevron and its partner state oil 
company (TPAO) were able to do limited field survey work using 
Turkish nationals.  With Embassy assistance and the support of the 
Minister of Energy, Chevron and its partners gained permission to 
start a full seismic survey (using helicopters) in spring 2006. 
 
¶3.  (SBU) Unfortunately, at this point the French seismic contractor 
CCG decided that it did not want to do the work because of security 
concerns.  Chevron and TPAO decided to do a more limited seismic 
survey using roads.  Chevron officials admitted to us that the 
geology was not viewed as extremely favorable, but they wanted to 
maintain good relations with the Ministry of Energy.  Moreover, they 
viewed the similar geology across the Iraqi border as more 
favorable, and thought that this work might provide valuable 
information for the day that there was clarity on how to do oil 
business in northern Iraq. 
 
----------------------------------------- 
Killing of Turkish Security Firm Employee 
----------------------------------------- 
 
¶4.  (SBU) Chevron country manager John Connor told us that Chevron 
and TPAO began its road-based seismic campaign in mid June, 
involving teams of mine detectors, surveyors, drillers, blasters, 
recorders, and security personnel.  The teams methodically worked 
along the road along the Iraqi border northeast of Silopi.  On the 
morning of July 11, when the Yukselis Company security team advanced 
ahead of the mine detection team (contrary to procedures), the team 
hit and detonated an improvised explosive device, resulting in two 
injuries of Turkish personnel, one grave.  The gravely injured 
victim later died in the hospital.  The Chevron official said that 
the device had been placed the night before, presumably by the PKK, 
in an obvious tire rut, after some Chevron teams had passed on that 
road the day before.  He estimated that it comprised about 3 kg of 
explosives. 
 
¶5.  (SBU) Chevron's subsequent security assessment determined that 
they would cease the seismic operations and Chevron personnel 
consulted with the Embassy RSO and DAO on its plans to remove 
equipment and detonate any prepared explosives.  During July 25-28 
Chevron removed equipment, cleaned up operations, and demobilized 
its teams, without any security incidents. 
 
--------------------------------------------- --- 
Still Aiming to Keep the Contract Alive - Plan B 
--------------------------------------------- --- 
 
 
ANKARA 00004481  002 OF 002 
 
 
¶6.  (SBU) Connor told us that the partners did not have sole right 
to declare "force majeure" under the contract (granting an exemption 
for work requirements because of events outside of their control). 
Under the contract, the GOT must approve force majeure and there 
would be political sensitivities and points of contention in going 
down this path.  Chevron used relatively minor comparable clauses to 
shut down the seismic operations, and informed the GOT that the 
partners planned to undertake exploratory drilling later this year 
in an area perceived as relatively safer west of Silopi.  Under the 
partnership agreement this obligation would fall to the third 
partner, French company Perenco.  Perenco would presumably perform 
its own security assessment before moving forward. 
 
¶7.  (SBU) Comment: Chevron and other oil shippers have closely 
watched progress on potential Bosphorus bypass projects.  Chevron's 
involvement in the efforts to gain Russian approval for the CPC 
(Caspian to Black Sea) pipeline expansion have resulted in some 
pressure from the Russian government for it to participate in the 
Russian favored Burgas-Alexandropoulos project, rather than the 
Turkish favored Samsun-Ceyhan bypass project.  Chevron's 
determination to keep the Southeast permit alive is based on the 
company's desire to maintain good relations with the GOT for the 
range of its oil activities.  The shippers are still maintaining 
cautious flexibility while bypass sponsors seek oil throughput 
guarantees to secure financing. 
 
¶8.  (SBU) Comment Continued: There is great interest from Turkish 
and foreign companies in Turkey for clarity on how to do oil and gas 
exploration and production in northern Iraq.  Achieving this clarity 
still depends on Baghdad and the KRG working out a road map and 
legislation for companies to follow.  While a few companies have 
apparently struck deals solely with the KRG, the reputable Turkish 
and western companies are waiting for clear rules of the game. 
 
McEldowney