VZCZCXRO9125
RR RUEHAG RUEHDBU RUEHDF RUEHIK RUEHLN RUEHLZ RUEHROV RUEHVK RUEHYG
DE RUEHAK #6609/01 3411444
ZNR UUUUU ZZH
R 071444Z DEC 06
FM AMEMBASSY ANKARA
TO RUEHC/SECSTATE WASHDC 0223
INFO RUCPDOC/USDOC WASHDC
RHEBAAA/DEPARTMENT OF ENERGY WASHDC
RUCNMEM/EU MEMBER STATES
RUCNCIS/CIS COLLECTIVE
RUEHGB/AMEMBASSY BAGHDAD 0821
RUEHIT/AMCONSUL ISTANBUL 1754
RUEHDA/AMCONSUL ADANA 1402
RUEHIK/AMCONSUL THESSALONIKI 0052

UNCLAS SECTION 01 OF 02 ANKARA 006609 
 
SIPDIS 
 
USDOE FOR CHARLES WASHINGTON 
USDOC FOR 4212/ITA/MAC/CPD/CRUSNAK 
STATE ALSO FOR EUR BRYZA AND S/P HELLMAN 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ENRG EINV EPET EFIN TU GR
SUBJECT: TURKEY-GREECE GAS INTERCONNECTOR DELAY 
 
REF: A. ANKARA 6396 
 
¶B. ANKARA 6403 
¶C. ATHENS 3076 
 
ANKARA 00006609  001.2 OF 002 
 
 
Sensitive But Unclassified.  Please handle accordingly. 
This cable was codrafted by Embassy Athens 
 
¶1.  (SBU) SUMMARY: Turkish state pipeline company BOTAS announced a 
delay in completion of the Turkey-Greece (gas) Interconnector (TGI) 
until early summer 2007.  Although BOTAS claims construction delays 
on both the Greek and Turkish sides, the head of Greece's natural 
gas company (DEPA) said Greece was on track to open its link with 
Turkey in March 2007 and to Italy by the end of 2011.  The small 
"disconnect" on completion timing between the two sides does not 
appear to be contentious.  The Greek Government has made a final 
decision to place its portion of TGI under the soon-to-be-created 
gas transit infrastructure holding firm, known as DESFA.  Both 
Turkey and Greece attach great importance to this first symbolic gas 
pipeline link to European consumers.  Timing of arrival of 
contracted Azeri gas from the South Caucasus Pipeline (SCP) into 
Turkey to provision a symbolic first Caspian shipment to Europe via 
Turkey is still uncertain because of technical and political delays 
(Ref A).  Russian pressure is growing on both Turkey and Greece to 
accept Blue Stream gas for transit to Europe.  End Summary. 
 
- - - - - - 
BOTAS Talks 
- - - - - - 
 
¶2.  (SBU) Quoting BOTAS acting Director Saltuk Duzyol, the Turkish 
press recently reported delays in opening the TGI to summer 2007 due 
to construction problems.  The article noted that the original 
estimated construction completion date for the $300 million, 285 km 
pipeline would have been November 2006. 
 
¶3.  (SBU) BOTAS Deputy Director Sakir Arikan stated that there had 
been a projected delay in construction completion of TGI to June 
2007, from previous estimates of March.  He said the good news was 
that the golden weld completing the most difficult Sea of Marmara 
crossing was completed on December 4.  Arikan said the bad news was 
that DEPA and BOTAS faced delays in tendering and completing the 
Meric River border crossing.  He said this had always been 
identified as the critical path element which caused the overall 
delay.  He said that BOTAS and DEPA met in Istanbul on December 5 to 
agree on the modalities of working together on the river border 
crossing.  Arikan stressed that there were other construction delays 
- off the critical path - on both the Greek and Turkish portions, 
but asserted that there was no finger pointing between the two 
sides. 
 
¶4.  (SBU) Arikan corroborated press accounts that the GOT had to 
cancel and re-tender the contract for the partially complete 193 km 
Karacabey-Ipsal Thrace pipeline portion for contractor 
non-performance (Bayinder Insaat - Su Tek).  He said that this would 
be re-tendered in one month and this portion would be completed in 
three-four months.  Finally, Arikan mentioned a short portion 
through rice fields that had to be expropriated through a special 
provision of the procurement law to assure timely completion. 
 
- - - - - - - - - - - 
The DEPA Perspective 
- - - - - - - - - - - 
 
¶5.  (SBU) DEPA Managing Director Papageorgiou claimed to be sanguine 
about the delay in the Turkish leg of TGI, but was concerned BOTAS 
could use the delay to reduce the amount of Azeri gas it would send 
on to Greece.  "A delay until the summer on the Turkish side is ok, 
but I want to obtain the full 0.25bcm of Azeri gas promised for 
¶2007.  This is important for all of us for symbolic reasons." 
Papageorgiou said he had met with SOCAR Deputy Nasirov in Brussels 
in November, who had said SOCAR could ship Greece up to .3bcm, 
comfortably above the promised 0.25bcm. 
 
¶6.  (SBU) Papageorgiou outlined progress on the Greek side of the 
Greece-Turkey link.  The Italian firm Ghizzoni has already completed 
construction of the link from Alexandroupolis to the Turkish border, 
and the contractor for the Komotini-Alexandroupoli leg, the Greek 
firm Prometheus, along with its Russian partner Streytransgas, is on 
track to complete its part of the pipeline by March 2007.  Gas 
transiting from Turkey would as of that time be able to enter the 
 
ANKARA 00006609  002.2 OF 002 
 
 
Greek grid. 
 
¶7.  (SBU) Papageorgiou said that the underwater portion of TGI 
crossing from Greece to Italy would be owned and operated by the 
Poseidon Corporation, a joint venture of DEPA and Italian Edison. 
Poseidon has applied to the Greek and Italian regulators, as well as 
to the EU, for approval of the pipeline's route, as well as for 
third party access exemptions allowing Poseidon to dictate the 
supply of gas.  Poseidon has requested exemptions for 100% of the 
capacity, but Papageorgiou expects to get exemptions for between 80 
and 90% of the capacity.  Papageorgiou said that Banca Intezza is 
serving as Poseidon't technical advisor.  Papageorgiou said current 
planning indicated the Poseidon portion of the pipeline would be 
completed and ready to link up with the Italian gas infrastructure 
"in 2011." 
 
- - - - - - - - - - - - - - - - - - - - 
Creation of DESFA Completed in January 
- - - - - - - - - - - - - - - - - - - - 
 
¶8. (SBU) Papageorgiou noted that the Greek Government had decided 
that the Greek portion of TGI would fall under the Public Gas 
Infrastructure Company (DESFA), to be created in January 2007 and 
which will be the holding company for Greece's entire natural gas 
transmission system.  DESFA's board will be appointed by the 
Ministry of Development, although it will be a DEPA subsidiary. Now 
that the GoG has made the decision in support of DESFA, Papageorgiou 
said, it was essential that it take the steps necessary to maximize 
Caspian throughput.  This includes negotiating long-term contracts 
with Caspian suppliers and changing Greek law to allow an exemption 
for the Greek portion of TGI from the standard national tariffs, 
which Papageorgiou said were uneconomically high for TGI. 
 
¶9.  (SBU) COMMENT: The TGI construction delay in Turkey may not be 
that unexpected for a substantial international pipeline, and the 
small disconnect between the two companies' estimated completion 
does not appear to be material or a source of argument or blame.  In 
any case, the TGI appears to be less contentious than the delays and 
squabbles generated between parties in the bigger BTC oil pipeline 
and the on-going SCP Baku-Tbilisi-Erzurum connection for Azeri Shah 
Deniz gas.  BOTAS claims to be ready to accept gas at the Turkish 
border from SCP, which leaves open the possibility of shipping 
symbolic levels of Azeri gas to pass through Turkey to Greece in 
¶2007.  As reported by Baku and Tbilisi, Russia is pressuring 
Azerbaijan and Georgia not to deliver gas to Turkey at all or not at 
contracted prices.  Gazprom has also been increasingly vocal and 
active in Turkey, seeking to promote additional volumes of Russian 
gas via Blue Stream (I or II) to transship Turkey to Europe. 
 
¶10.  (SBU) COMMENT CONTINUED: Whatever the revised schedule will 
itself hold is open to question.  BOTAS has experienced 
irregularities in tendering and frequent contractor problems in 
various pipeline projects, which have also reflected negatively on 
its financial and management capacity.  For his part, DEPA's 
Director admitted the firm had a somewhat spotty record of on-time 
construction completion; we believe his 2011 target for TGI 
completion is optimistic. 
 
Wilson