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C O N F I D E N T I A L SECTION 01 OF 02 ISTANBUL 000553 
 
SIPDIS 
 
EEB FOR A/S SULLIVAN 
SPECIAL ENVOY FOR EURASIAN ENERGY GRAY 
EEB FOR ENERGY COORDINATOR MANN 
EUR FOR DAS BRYZA 
 
E.O. 12958: DECL: 10/31/2018 
TAGS: ENRG EPET IZ TU
SUBJECT: PRIME MINISTER WELCOMES U.S. HELP ON ENERGY 
 
REF: ANKARA 1777 
 
Classified By: AMBASSADOR WILSON FOR REASONS 1.4 (B) AND (D) 
 
¶1.  (C) Summary.  On October 30, Department of Energy Acting 
Deputy Secretary Jeffrey Kupfer led a U.S. delegation to 
discuss Turkey's energy needs and its strategic role as a 
transit country with Prime Minister Erdogan.  Following-up on 
the President's October 8 letter to the PM (reftel), Kupfer 
offered to send a technical-level delegation to Turkey in 
December to identify areas for cooperation in the energy 
sector.  He also discussed the idea of a multi-lateral 
financing mechanism to support energy investment in Turkey 
and help diversify its energy mix away from natural gas.  The 
PM assured the delegation that the development of the 
Southern Corridor is a strategic priority for Turkey but 
questioned whether Azeri gas would be sufficient.  He 
indicated Turkmenistan should be a complimentary source gas 
for Turkey and Europe and was positive about its development. 
 He warmly welcomed all U.S. offers of cooperation.  End 
summary. 
 
¶2.  (C) October 30-31, a high level USG delegation discussed 
Turkish and European energy needs with Prime Minister 
Erdogan, Foreign Minister Babacan, Energy Minister Guler, 
Treasury Minister Simsek and U.S. and Turkish companies 
(other meetings are reported separately.)  Besides Deputy 
Secretary Kupfer the U.S. delegation included Overseas 
Private Investment Corporation (OPIC) President Robert 
Mosbacher, Trade and Development Agency Director Larry 
Walther, Export-Import Bank Chief Operating Officer John 
McAdams, Special Envoy for Eurasian Energy C. Boyden Gray, 
and Ambassador. 
 
¶3.  (C) Deputy Secretary Kupfer said his team's visit follows 
up the President's letter of early October, and its 
interagency composition reflects the priority we attach to 
the issues the letter raised.  The U.S. wants now to activate 
the Southern Corridor, and the President has been in touch 
with producer, transit and consumer country leaders.  We want 
to move the ball forward with as many concrete steps as 
possible in the next several months.  Beyond that, though the 
U.S. players will change, our interests will not, and Turkey 
could expect our work to continue. 
 
¶4.  (C) Kupfer recognized Turkey's need to strike a balance 
between domestic energy demand, the needs of downstream 
purchasers and the economics of pipeline financing and 
construction.  The U.S. delegation's visit and other 
efforts are designed to help Turkey achieve that balance.  To 
that end, the U.S. proposes to send a technical 
delegation to Turkey in mid-December to evaluate Turkey's 
priorities for energy sector investment.  Kupfer noted the 
fastest gains could be made in energy efficiency and cited a 
rough estimate that a 10% increase in efficiency could 
yield a saving of 6 billion cubic meters of gas annually. 
 
¶5.  (C) Kupfer and OPIC President Mosbacher described our 
interest in working with the international financial 
institutions to establish a financing mechanism to accelerate 
investment in Turkey's energy sector.  Mosbacher said that 
OPIC and EXIM are prepared to step in and fill the current 
private sector financing gap for energy sector projects. 
OPIC can offer up to USD 500 million as part of the 
multi-lateral lending facility, and EXIM COO McAdams said 
EXIM can do likewise.  Mosbacher recognized the urgent need 
for investment to avoid energy shortages in the near future, 
but noted that accelerated financing would depend on the 
GOT's ability quickly to identify, tender and award energy 
sector projects. 
 
¶6.  (C) PM Erdogan noted the long history of energy 
cooperation between the U.S. and Turkey.  Referring to the 
upcoming U.S. elections, he said that governments come and go 
but our strong partnership on energy would remain unchanged. 
He appreciated President Bush's letter, which he described as 
justifying Turkey's concerns about its own energy supply, and 
said he will reply positively soon.  Diversifying Turkey's 
gas sources is a matter of urgency because gas contracts with 
Russia (6 bcm) and Algeria (4 bcm) will expire in 2011.  He 
asked for U.S. support in Turkey's discussions with Qatar and 
 
ISTANBUL 00000553  002 OF 002 
 
 
Saudi Arabia to get more gas and welcomed U.S. assistance in 
reducing Turkey's dependence on natural gas.  Erdogan 
stressed the importance of moving quickly to develop 
alternative energy options including renewables, hydro and 
nuclear.  Given the global economic crisis, U.S. assistance 
to help attract financing to Turkey's energy sector was 
especially important.  He welcomed the idea of the assessment 
team and said Turkey is willing to cooperate in all areas. 
 
¶7.  (C) Erdogan said that opening up the Southern Corridor is 
important to Turkey because it ensures secure energy supplies 
for Turkey and Europe.  The crisis in Georgia has elevated 
the importance of energy diversification and gave the 
Southern Corridor new momentum which we shouldn't lose. 
Erdogan stressed that Turkey fully supports the Nabucco 
project and welcomed the visit of EU Energy Commissioner 
Piebalgs to Turkey Nov 6 as a sign of progress on this 
project.  However, Erdogan was skeptical about gas 
availability for Nabucco.  The focus for gas supply has been 
Azerbaijan but Azeri gas will not be sufficient for Turkey's 
needs and for Europe's.  Perhaps, in the longer-term Azeri 
gas could be sufficient but in the short term, it is not, he 
argued. 
 
¶8.  (C) Erdogan indicated that Turkey is looking toward 
Turkmenistan to complement Azeri gas for the Southern 
Corridor.  He had positive talks with Turkmen President 
Berdimuhamedov who reportedly promised 10 bcm for Turkey on 
the condition that Turkey made the transit arrangements from 
the Turkmen border.  Trans-Caspian or trans-Iranian routes 
are available.  Erdogan said the recently released 
Gaffney-Cline study shows that Turkmen gas reserves are "well 
beyond" previous expectations, and this is good news for the 
Southern Corridor. 
 
¶9.  (C)  Comment:  This meeting with Erdogan was positive and 
upbeat.  The seniority and interagency diversity of the U.S. 
team sent a welcome signal of seriousness, and Erdogan 
responded in that vein.  He clearly welcomed our ideas to 
help on energy alternatives and their financing, especially 
in the current global climate, and he was strongly supportive 
of the Southern Corridor.  Key now will be follow up.  End 
Comment. 
 
¶10.  (U)  The delegation cleared this text prior to departure. 
WIENER