US embassy cable - 04ANKARA4109

C O N F I D E N T I A L ANKARA 004109 
 
SIPDIS 
 
E.O. 12958: DECL: 07/08/2014 
TAGS: ENRG, EPET, ETRD, PREL, TU 
SUBJECT: CASPIAN BASIN ENERGY DIPLOMACY AMBASSADOR MANN 
DISCUSSES CASPIAN ISSUES WITH TURKISH ENERGY MINISTER GULER 
 
 
Classified by Econ Counselor Thomas Goldberger for reasons 
1.5 (b) and (d). 
 
1.  (C) Summary:  EUR Ambassador Steven Mann encouraged 
Turkish Energy Minister Guler to work together with the 
United States to promote Caspian natural gas exports through 
Turkey to Europe, but cautioned about Iranian gas transitting 
Turkey.  Guler noted Turkey's difficult relationship with 
Iran and urged support for an alternative -- a pipeline 
bringing gas from Turkmenistan.  Saying that it is up to the 
market to decide if a Bosphorus bypass pipeline makes sense, 
Mann urged Guler to approve the license application for the 
Thrace bypass proposal.  End Summary. 
 
2.  (SBU) Ambassador Mann met with Turkey,s Energy Minister 
Hilmi Guler on June 16, on the margins of the Tale of Three 
Seas Energy Conference in Istanbul.  (Other meetings reported 
septel.)  Mann urged Guler to think of ways the U.S. and 
Turkey can work together to promote natural gas exports from 
the Caspian region via Turkey into Europe.   However, Mann 
warned against the transit through Turkey of Iranian gas -- 
whether through the proposed Nabucco pipeline or through the 
proposed Turkey-Greece interconnector project.  Mann said the 
transit of Iranian gas "would endanger US-Turkish energy 
cooperation and open the way for possible penalties and 
sanctions." 
 
3.  (SBU) Guler explained Turkey's difficult relationship 
with Iran and warned that Iran and Russia are working 
together to control natural gas exports to Europe -- they do 
not want competition to emerge.  Guler appealed for USG help 
in developing alternative sources of supply to fill Europe,s 
growing demand.  He said he had discussed with Azerbaijan 
President Aliev the construction of a pipeline connecting 
Turkmenistan,s gas fields with the Shah-Deniz line in 
Azerbaijan.  Guler noted that the southern portion of the 
Caspian is only 300-400 feet deep, so the pipeline could be 
built for less than $1 billion, and it would solve 
Turkmenistan,s problem with the Iranians.  Aliyev is open to 
this idea, according to Guler, and promised to discuss with 
the Turkmenbashi. 
 
4.  (C) Mann explained his skepticism about the prospects for 
a deal with Turkmenistan,s President Niyazov.  The USG still 
strongly favors alternative routes for Caspian region gas -- 
including the proposed Turkmenbashi-Baku route -- but given 
Niyazov,s fears of Russia and his dysfunctional 
decisionmaking style, we do not expect to achieve any 
progress.  Mann reminded Guler of Kazakhstan President 
Nazarbayev,s continued interest in exporting gas and asked 
Guler to explore options to ship Kazakhstan natural gas 
through Turkey.  He recalled that Nazarbayev, at the 1999 
Istanbul Summit, wrote on the document on Caspian exports 
"and 20 bcm/y of Kazakhstan natural gas for the European 
market." 
 
5.  (C) Turning to the issue of proposals for a Bosphorus 
bypass pipeline, Mann told Guler that the USG does not favor 
one proposed pipeline route over another -- it is up to the 
market to decide.  However, the USG does want the government 
of Turkey to move rapidly and transparently to approve the 
required paperwork for the license application for the Thrace 
bypass proposal (which has been pending for a year) so that 
the commercial options can move forward.  Guler said that the 
license for the Thrace bypass was being held up by the MFA 
and MOD. 
 
6.  (SBU) In a separate meeting, MFA Deputy U/S Alev Kilic 
told Mann the GOT is still uneasy that the Thrace and other 
bypass pipeline options would affect the completion and full 
utilization of the Baku-Tbilisi-Ceyhan (BTC) pipeline.  Mann 
stressed that BTC is far enough along toward completion and 
would not be adversely affected by the other bypass options. 
The USG had reached such a conclusion in June 2002, when it 
approved the TDA grant for a feasibility study for one of the 
options. 
 
7.  (U) Ambassador Mann cleared this cable. 
DEUTSCH