US embassy cable - 04ANKARA4892

UNCLAS SECTION 01 OF 03 ANKARA 004892 
 
SIPDIS 
 
SENSITIVE 
 
USDOC FOR NEWMAN 
 
E.O. 12958: N/A 
TAGS: EPET, EWWT, PREL, ELTN, EINV, SENV, TU 
SUBJECT: BOSPHORUS VOLUNTARY PRINCIPLES AND THRACE BYPASS 
DEMARCHES DELIVERED 
 
REF: A. A. STATE 178586 
     B. B. STATE 178695 
     C. C. ANKARA 4623 AND PREVIOUS 
 
 SENSITIVE BUT UNCLASSIFIED.  Please Protect Accordingly. 
 
1.  (SBU) SUMMARY: Acting Econ Counselor delivered ref a and 
b demarches to GOT MFA Energy Deputy Director Hakki Akil. 
Akil expressed strong disappointment at USG objections to 
"Voluntary Principles on straits oil tankers and bypass 
pipelines."  He denied press reports that the GOT was 
supporting the Transneft sponsored trans-Thrace bypass 
project; rather, he insisted that the five bypass projects 
were still under analysis in the relevant ministries for 
environment and route issues.  Akil noted that the 
trans-Thrace routes, including the Thrace Development Company 
project (with U.S. company involvement), faced growing 
environmental opposition.  The GOT official insisted that the 
GOT permitting process was transparent and fair. 
PolCounselor delivered same demarches to Prime Ministry's 
chief foreign policy advisor Davutoglu.  In a separate 
meeting with Ambassador, ChevronTexaco officials expressed 
support for multiple Bosphorus bypass pipelines and the 
concept of "Voluntary Principles", but asserted that there 
would be no success without involvement of Russian companies 
and the governments of Black Sea countries.  Action request 
at paragraph 10.  End Summary. 
 
Disappointment on Voluntary Principles 
-------------------------------------- 
 
2.  (SBU)  Acting EconCounselor and EconOff delivered ref a 
demarche on the USG position on the Turkish MFA proposed 
"Voluntary Principles" to GOT MFA Energy Deputy Director 
Hakki Akil on August 20.  While accepting the USG expression 
of admiration for the concept, Akil was disappointed by the 
USG objections to the text (recommend delinking the tanker 
traffic and bypass pipeline issues; oppose quantification of 
tanker transit costs; support that bypass routes be based on 
commercial feasibility; Russians and others must be engaged). 
 As author of the concept and noting the dire problem of 
congestion in the Turkish Straits, Akil expressed frustration 
at the fundamental USG objections to the text.  He noted that 
he had taken on board all the word suggestions proposed by 
the USG earlier in the year.  Akil described his proposed 
public-private partnership as a transparent approach to bring 
all parties together on a vouluntary basis to address the 
environmental, security, safety and cultural risks posed by 
increasing traffic in the Turkish Straits.  He stressed the 
importance of improving the safety of shipping in the straits 
before a major accident happens, with unforseeable 
consequences.  Akil noted that the approach was modeled after 
the Voluntary Principles for Extractive Industries and Human 
Rights, championed by U.S. and U.K., and, according to Akil, 
forced onto the GOT for the Baku-Tbilisi-Ceyhan (BTC) 
project.  Akil claimed that the Voluntary Principles approach 
could address the inherent first mover- free rider dilemma of 
getting one company to commit to a bypass project.  Finally, 
he expressed regret that the USG had not participated in the 
July 23 meeting in Istanbul. 
 
Lots of Bosphorus Bypass projects - still no permits 
--------------------------------------------- ------- 
 
3.  (SBU) Emb Officers also delivered ref b demarche on 
Thrace bypass pipelines.  Akil categorically denied press 
reports that the GOT supported any particular route or 
project- in particular the Transneft supported route that 
"copycats" that of Thrace Development Company (with support 
of American Howard Lowe).  He said there were now five 
applications for conditional permits for routes in Turkey: 
the two above for trans-Thrace and three for Samsun-Ceyhan 
(one with involvement by U.S. firm Universal Ensco).  Akil 
noted the negative attention attracted by environmental 
NGO's, including WWF, on both terminuses of the proposed 
trans-Thrace route.  This route goes through a relatively 
developed section of Turkey in which a pipeline could be 
expensive and disruptive, and the harbor on the south end is 
environmentally sensitive as a prime area for diving and 
biodiversity, according to Akil.  In comparison, the Dep DG 
described the advantages of the Samsun-Ceyhan routes from 
both environmental and use of existing facilities 
perspectives. 
 
4.  (SBU) Akil emphasized that the overriding goal of the GOT 
was to reduce dangerous shipping in the Turkish Straits.  He 
asserted that choice of potential routes and projects would 
ultimately be made based on commercial feasibility. 
According to Akil, the five applications were still under 
study at the Ministries of Energy, Foreign Affairs, and 
Environment, as well as the PM Office for the main criterion 
of environmental acceptability of the route, including 
terminuses.  He said that prior to awarding conditional 
permits, projects would have to in turn satisfy criteria of 
health, environment, and safety and through-put commitments. 
When questioned further on the latter point, Akil cited the 
Odessa-Brody as the counter-example of the importance of 
securing a through-put commitment or of obtaining the direct 
participation of an oil shipper.  He concluded that all five 
applications had not yet satisfied the above criteria. 
 
5.  (SBU) In a separate conversation with EconOff on August 
19, Ministry of Energy Dep U/S Selahattin Cimen also denied 
any special approval by the GOT for the Transneft backed 
trans-Thrace pipeline.  He emphasized that the Ministry and 
GOT's policy was to let the market decide the best route and 
project, ultimately based on throughput commitments and 
financing. 
 
6. (SBU) Polcounselor also delivered both demarches to prime 
ministry chief foreign policy advisor Davutoglu August 25. 
Regarding bypass routes, Davutoglu acknowledged that the 
Russians have been pressing hard for Turkish acceptance of 
the Transneft project.  He expects discussions to continue 
during Putin's Sept. 2-3 state visit, possibly laying the 
groundwork for a decision in favor of the Russians, he 
implied.  However, he went on to echo Akil's points regarding 
the environmental sensitivity of the Saros Gulf on Thrace's 
Aegean coast and the possible negative impact of a 
trans-Thrace pipeline on the surrounding area.  Samsun-Ceyhan 
might make more sense despite being a longer route, he said, 
since the Ceyhan-Iskenderun area has already become a major 
hub for transshipment of crude, with attendant 
infrastructure.  Regarding the voluntary principles, he 
deferred comment until he had had an opportunity to study our 
non-paper, but doubted whether a conference involving both 
companies and littoral states would be the best way to 
proceed. 
 
7.  (SBU) Ambassador has scheduled a meeting August 31 with 
the Minister of Energy to reinforce demarche messages and 
related issues. 
 
ChevronTexaco likes bypasses, but Russians must be engaged 
--------------------------------------------- ------------- 
 
8.  (SBU) In a separate meeting with Ambassador on Aug 23, 
ChevronTexaco officials (Eurasia Unit President Guy 
Hollingsworth and Turkey Country Manager Ismail Kafescioglu) 
expressed support for 1-2 Bosphorus bypass pipelines to 
relieve congestion and delays in the Turkish straits.  Citing 
the company's growing investment in the Caspian region, the 
oil shipper noted that it would eventually seek to 
participate in bypass projects.  When the Ambassador 
mentioned the ChevronTexaco paper on safety (previously 
shared with Department), the oil officials expressed deepest 
concerns about Russian shippers ("rust buckets"). 
Nevertheless, they insisted that more volume could be safely 
shipped through the straits and asserted that the GOT was 
deliberately employing delay tactics to increase pressure on 
shippers. 
 
9.  (SBU) ChevronTexaco stated that the Voluntary Principles 
had merit, but the GOT had made a significant strategic error 
in not engaging the Russian companies from the outset.  In 
their view, involvement of Russian companies and Black Sea 
littoral governments was critical for advancing an informal 
working group to facilitate bypass development.  The oil 
officials expressed support for diverse pipelines so that the 
Russians or Turks would not be able to exercise preferential 
control.  They noted that realistically the first project may 
have to be one of the cross-Turkey bypass pipelines. 
ChevronTexaco lamented what they called the "done deal" of 
the reversal of Odessa-Brody, potentially aggravating the 
pressure on the Bosphorus. 
 
10.  (SBU) ChevronTexaco also briefed Ambassador on plans to 
commence seismic exploration on long-inactive licenses in SE 
Turkey.  They were bullish on potential for oil field 
development there.  They noted that they were inclined to use 
French oil service companies to avoid American/British 
visibility given security concerns. 
 
11.  (SBU) ACTION REQUEST: Post seeks Department guidance on 
whether to encourage GOT to build on the "Voluntary 
Principles, while addressing ref a objections, but to move 
forward as a truly voluntary and informal working group, 
expanded to include Black Sea littoral governments and 
Russian companies.  The group could focus on enhancing safety 
mechanisms in parallel with governments working to facilitate 
timely and transparent permitting of bypass pipeline 
projects.  In addition, Post could encourage GOT to consider 
using the September 2-3 President Putin visit as an 
opportunity to seek high-level engagement with GOR on Turkish 
Straits issues and bypasses- not to favor a particular 
project, but to advocate an informal, nonbinding working 
group.  Getting the diverse parties to work together will not 
be easy; even western companies hold extremely competitive 
interests and views.  (ChevronTexaco was highly critical of 
BP and what it termed the British company's vigorous 
opposition to expanding the CPC pipeline, in favor of 
filling/expanding BTC at all costs.) 
EDELMAN