US embassy cable - 03ANKARA6058

C O N F I D E N T I A L SECTION 01 OF 02 ANKARA 006058 
 
SIPDIS 
 
 
E.O. 12958: DECL: 09/16/2013 
TAGS: ECIN, ECON, ENRG, IZ, PREL, TU 
SUBJECT: TURKEY:  AMBASSADOR EDELMAN'S MEETING WITH ENERGY 
MINISTER GULER 
 
Classified by Ambassador Eric S. Edelman for reasons 1.5 (b) 
and (d).  CPA Baghdad minimize considered. 
 
 
1.  (C)  Summary:  Ambassador Edelman,s first meeting with 
Energy and Natural Resources Minister Hilmi Guler focused on 
Turkey,s efforts to reduce the high prices it pays for 
natural gas imports, principally from Russia, and Guler,s 
desire to help U.S. efforts in Iraq.  Guler said his Ministry 
was looking at ways to deliver water and power to Iraq. 
(Prior to the meeting, the Ministry announced the successful 
start of power supplies (50 megawatts) to Iraq).  Guler 
discussed some ambitious, long-term ideas, such as the Peace 
Pipeline to deliver Turkish water to the Middle East and 
bypass pipelines to reduce tanker traffic through the 
Bosphorus.  End Summary. 
 
 
US Support for Turkey,s Energy Goals 
 
 
2.  (SBU) Ambassador Edelman paid a courtesy call September 
17 on Energy and Natural Resources Minister Hilmi Guler. 
Edelman emphasized the strong support of the U.S. for the 
East-West Energy Corridor and congratulated Minister Guler on 
the progress on the BTC pipeline, which will bring a new 
source of oil supply to world markets.  Looking ahead, the 
U.S. is interested in the prospects for Turkey to become a 
hub for natural gas exports to Europe.  Edelman also noted 
how important it was for Turkey to succeed in its efforts to 
liberalize the energy market and offered U.S. help, including 
assistance from the Trade and Development Agency.  He noted 
that U.S. power companies remain interested in the 
opportunities to invest in Turkey,s changing energy sector, 
but urged that the problems faced by U.S. firms involved in 
Build-Operate-Transfer (BOT) projects needed to be cleared up 
before other companies will come. 
 
 
GOT Priority is Lowering Natural Gas Prices 
 
 
3.  (C) Guler stressed that he wanted to build a more 
effective relationship with the U.S, although he avoided 
responding to U.S. concerns about the BOT issue.  He said 
that he attached great importance to the BTC pipeline and was 
eager to bring the project on line on schedule.  He said that 
a great concern for his Ministry was the cost of natural gas, 
which accounts for 65% of Turkey,s power production.  The 
chief problem is the high price Turkey is paying for 
long-term contracts from Russia, especially the &very 
expensive8 natural gas from the Russian Bluestream project. 
Negotiations with Russia to reduce natural gas prices are 
near completion, Guler said.  He added that the Russians do 
not want to see the Shah-Deniz gas pipeline project, which 
would bring natural gas from Azerbaijan to Turkey, go 
forward.  Guler said he was thinking about long-term 
alternatives for cheaper gas supplies, including from 
Turkmenistan, Iran or Iraq.  On Iraq, Guler mused that 
someday Iraq could use its great natural gas resources to 
produce electricity to sell to Turkey. 
 
 
Iraq 
 
 
4.  (SBU) In the near term, Guler said Turkey wanted to help 
the U.S. bring stability and prosperity to Iraq and was ready 
to provide "any assistance we can."  He said two important 
needs for that country are electric power and water.  Guler 
told Ambassador Edelman that he recently discussed with 
Energy Ministry experts ways his Ministry could contribute to 
Iraq.  Three immediate ideas were:  to ship fresh water to 
Iraq by train; to mend electricity lines between the two 
countries to increase Turkish power sales to Iraq; and to 
ship gasoline by train. 
 
 
5.  (C) Ambassador Edelman welcomed Guler,s expression of 
support and ideas to help the situation in Iraq -- more can 
be done and the U.S. would welcome further efforts by Turkey. 
 He noted that security remains a difficult issue impeding 
efforts in Iraq.  For example, Iraqi resistance has targeted 
water infrastructure and oil pipelines, which worsens the 
humanitarian conditions.  He said that U.S. would welcome 
Turkey,s contribution to stabilization forces in Iraq. 
Guler offered that perhaps Turkey could provide "special 
civil teams" to protect the pipelines.  Edelman said that 
Turkey should raise these ideas with the Coalition 
Implementation Council.  He added that the recent initiation 
of power sales by Karadeniz Power to Iraq was a very positive 
development.  Guler called it a win-win-win, referring to the 
benefits it brings to Iraq, Turkey and the U.S. 
 
 
Bosphorus Bypass 
 
 
6.  (U) Guler said he was interested in exploring ways to 
reduce the transit of oil tankers through the Bosphorus.  He 
raised two ideas to bring oil from tankers in the Black Sea 
to the Mediterranean -- one crossing Thrace and the other 
paralleling Bluestream and on to Ceyhan.  Edelman said the 
U.S. shared Turkey,s safety and environmental concerns about 
rising oil tanker traffic through the Bosphorus.  He 
emphasized, however, that projects to bypass the Bosphorus 
needed to be commercially viable in order to attract the kind 
of investment needed for such projects. 
 
 
Water 
 
 
7.  (U) Ambassador Edelman noted that Guler had cancelled 
recently a planned trip to Israel to discuss shipments of 
water.  Guler said that there was no problem with the 
project; he was forced to cancel the trip for medical 
reasons.  Guler went on to describe his hopes to use Turkey's 
water resources to bring peace to the region.  In addition to 
shipping water to Israel, he wanted to explore abandoned 
plans for a peace pipeline bringing water from Turkey to the 
Middle East as far as the Gulf States. 
 
 
8.  (C) Comment:  Guler was clearly interested in mobilizing 
his Ministry to do what it can to help in Iraq, specifically 
by addressing near-term needs for power, fuel and water.  We 
will work with the Ministry to encourage follow through on 
these suggestions.  However, Guler also was clearly fishing 
for U.S. support for some extremely ambitious ideas, such as 
using Turkey,s water resources to bring peace to the region. 
 Although some of his ideas appear impractical, we view his 
interest in water as an important opportunity to engage the 
Ministry in discussions about regional water issues, 
including the Tigris-Euphrates basin.  End Comment. 
EDELMAN