VZCZCXRO8199
RR RUEHAG RUEHDBU RUEHDF RUEHIK RUEHLN RUEHLZ RUEHVK RUEHYG
DE RUEHAK #5745/01 2761456
ZNR UUUUU ZZH
R 031456Z OCT 06
FM AMEMBASSY ANKARA
TO RUEHC/SECSTATE WASHDC 9153
INFO RUCPDOC/USDOC WASHDC
RHEBAAA/DEPT OF ENERGY WASHINGTON DC
RUCNMEM/EU MEMBER STATES COLLECTIVE
RUCNCIS/CIS COLLECTIVE
RUEHGB/AMEMBASSY BAGHDAD 0767
RUEHEG/AMEMBASSY CAIRO 0342
RUEHDM/AMEMBASSY DAMASCUS 1588
RUEHNE/AMEMBASSY NEW DELHI 0432
RUEHTV/AMEMBASSY TEL AVIV 0089
RUEHIT/AMCONSUL ISTANBUL 1400
RUEHDA/AMCONSUL ADANA 1179

UNCLAS SECTION 01 OF 02 ANKARA 005745 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
EUR FOR DAS BRYZA AND S/P FOR STEVE HELLMAN 
USDOE FOR CHARLES WASHINGTON 
USDOC FOR 4212/ITA/MAC/CPD/CRUSNAK 
 
E.O. 12958: N/A 
TAGS: ENRG EPET EINV PREL TU GG AZ RU
SUBJECT:  TURKEY'S BOTAS WORRIED ABOUT SOUTHERN GAS CORRIDOR 
 
REF: A) ANKARA 5699 
 
B) ANKARA 5624 
C) ANKARA 5332 
 
ANKARA 00005745  001.2 OF 002 
 
 
Sensitive But Unclassified.  Please handle accordingly. 
 
¶1.  (SBU) Summary: In an October 2 meeting, BOTAS officials 
expressed strong support for the southern gas corridor, but voiced 
concerns about developable reserves in Azerbaijan, pressure from 
Russia on Azerbaijan and Georgia, and how Iran's significant 
reserves fit into pipeline possibilities.  BOTAS said that it was 
ready to receive South Caucasus Pipeline (SCP) gas from Azerbaijan 
via Georgia and that the Turkey-Greece-Interconnector (TGI) 
construction was on track for early spring 2007 completion.  BOTAS 
officials said they would be pleased to participate in an 
IEA-convened southern corridor working group meeting if BOTAS 
participation was approved by the Ministry.  End Summary. 
 
----------------------------- 
Connection to Greece on Track 
----------------------------- 
 
¶2.  (SBU) BOTAS Acting DG Saltuk Duzyol told us that the 
Turkey-Greece-Interconnector (TGI) was on track for completion in 
spring 2007.  He said that 1.5 km remained to be completed in the 
Dardanelles crossing.  Duzyol admitted that there were some problems 
with the Meric River crossing to Greece and construction in the 
Thrace where BOTAS may have to replace the sub-contractor.  He 
stated that BOTAS would proceed with a sense of urgency to get as 
much work done as possible in advance of winter rains.  The BOTAS 
official still identified early spring 2007 as the date for 
completion; however, he noted that there were comparable delays on 
the Greek side where DEPA was required to use a Russian contractor 
based on previous agreement with Gazprom, and where the Greek 
Supreme Court had only recently approved the interconnector. 
 
¶3.  (SBU) Duzyol commented that after completion of the Dardanelles 
crossing the construction barge would go to Akcakoca on the Black 
Sea where a partnership of American firm Torreador-Madison and 
Turkish TPAO were developing a pipeline link to the Turkish grid for 
2 MCM of natural gas production from a shallow water off-shore 
platform. 
 
-------------------------------------- 
Southern Caucasus Pipeline Golden Weld 
-------------------------------------- 
 
¶4.  (SBU) While suggesting that Azerbaijan and the SCP consortium 
had created obstacles - partly a legacy of comparable claims and 
counter-claims with BP on BTC completion, Duzyol said that the 
"golden weld" completing Turkey's Erzurum spur link to the SCP was 
sealed at the Georgian border last week.  He claimed that Turkey is 
now ready to accept gas, but because of technical delays in 
Azerbaijan the SCP consortium was not ready to deliver gas to the 
border.  Duzyol claimed that the Turkish portion of the pipeline and 
the metering station were complete, but admitted that the compressor 
was late with only one unit functioning. 
 
¶5.  (SBU) Citing recent strained relations between Moscow and 
Tbilisi, the BOTAS officials expressed strong concern that Russia 
would put extreme pressure on Azerbaijan not to provide gas to 
Georgia and Turkey.  They understood that Russia had threatened not 
to deliver the 5 BCM Russian gas to Azerbaijan in 2007, putting in 
question Azerbaijan's ability to perform under its Shah Deniz Phase 
I contract with Turkey. 
 
¶6.  (SBU) Duzyol said the most important topic discussed at the BSEC 
Energy Ministerial in Sochi, Russia was prospects for Bosphorus 
bypass oil pipelines.  He delivered the standard Turkish government 
position on why Samsun-Ceyhan would be the best Bosphorus bypass oil 
pipeline project and why Russia will eventually come around to 
support it.  Duzyol also cited the potential linkages from Ceyhan 
(by pipeline or tanker) to the existing pipeline in Israel from 
Ashkalon to the Red Sea to provide crude oil to Asian markets.  The 
BOTAS official lamented Russia's clear intent to maintain its oil 
pipeline monopoly, and he admitted that Burgos-Alexandropolos was 
currently "a little ahead". 
 
ANKARA 00005745  002.2 OF 002 
 
 
 
---------------- 
Clearing the Fog 
---------------- 
 
¶7. (SBU) Sharing our strong support for a "southern gas corridor" to 
Europe, the BOTAS officials identified the critical importance of 
Shah Deniz.  They expressed concerns about the extent of 
Azerbaijan's exportable reserves and the country's will to follow 
through on development of Shah Deniz phase 2.  They lamented an 
extensive "fog" of problems with respect to Azerbaijan's intents and 
Russia's threats.  Accepting our position on Iran that it needed to 
get its house in order on both its pursuit of uranium enrichment and 
its unreliability as a gas supplier, Duzyol and his colleagues 
called for development of alternatives; i.e. Iraq (septel), 
Trans-Caspian from Turkmenistan and/or Kazakhstan, and Egypt to 
supplement Shah Deniz. 
 
¶8. (SBU) BOTAS officials were supportive of the action plan we laid 
out: 1) Turkey-Azerbaijan meeting to dispel lack of clarity on Shah 
Deniz Phase I and lay groundwork for transit arrangements for Phase 
II; 2) A larger southern gas corridor meeting convened by the IEA 
(they would participate with Ministry approval); 3) a TDA study 
visit to Henry Hub, Louisiana as an example of a good hub; and 4) a 
TDA feasibility study for a TCP from Kazakhstan (with potential link 
to Turkmenistan and possible inclusion of oil). 
 
¶9.  (SBU) COMMENT: The BOTAS officials were dismissive of notions 
that they intended to act like a Gazprom, but they called for Turkey 
playing a "pooling" role for the transit of a variety of sources. 
They called for "hurrying up" to avoid increased dependency on 
Russia and repeated their urging to "dispel the fog" on the moving 
parts that need to come together to make up a southern gas 
corridor. 
 
MCELDOWNEY