US embassy cable - 04ANKARA5051

UNCLAS SECTION 01 OF 02 ANKARA 005051 
 
SIPDIS 
 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: EPET, EWWT, PREL, ELTN, EINV, ENRG, SENV, TU, UK 
SUBJECT: AMBASSADOR DELIVERS BOSPHORUS DEMARCHES TO ENERGY 
MINISTER 
 
REF: A. MANN E-MAIL VIA JONES AUG 30 
     B. STATE 186707 
     C. STATE 178586 
     D. STATE 178695 
     E. ANKARA 4892 
 
SENSITIVE BUT UNCLASSIFIED.  PLEASE HANDLE ACCORDINGLY. 
1.  (SBU) SUMMARY: Ambassador delivered ref a-d demarches on 
Bosphorus bypass issues on August 31 to Minister of Energy 
Hilmi Guler.  Ambassador stressed that the USG did not 
support a specific route or project, but called for timely, 
transparent decisions from the GOT on permits, specifically 
for Thrace Development Company (TDC).  Ambassador delivered 
ref a-d messages on Odessa-Brody and Voluntary Principles on 
Turkish straits oil tankers and bypass pipelines.  Minister 
Guler promised a timely answer on the TDC permit, but noted 
that relevant Ministries were still studying all five 
trans-Turkey applications for issues of environment, safety, 
and through-put guarantees.  End Summary. 
 
Thrace Development Company 
-------------------------- 
 
2.  (SBU) Ambassador delivered ref a and d demarche on Thrace 
Development Company( TDC) on August 31 to Energy Minister 
Hilmi Guler, stressing that he would deliver the same message 
to the Minister of Foreign Affairs.  While stressing that the 
USG strongly supported a Bosphorus oil bypass, maybe two, if 
supported by the market, Ambassador noted that the USG did 
not support a particular route or project.  Nevertheless, he 
noted the longstanding application and diligent response from 
TDC for a trans-Thrace route.  Ambassador called for at least 
a timely up or down response.  Citing press reports that the 
GOT supported the Transneft backed trans-Thrace route, 
Ambassador emphasized that projects should be determined by 
market and environment realities, not by government lobbying 
or prescription.  Echoing replies from other government 
officials (ref e), the Minister categorically denied the 
press reports, stating that the GOT had not reached a 
decision on route or project(s).  He stated that in line with 
GOT procedures, the five project permit applications were 
still in the evaluation phase at the relevant ministries. 
The Minister noted that there had been a recent meeting at 
the MFA to study the advantages and disadvantages of the 
proposed projects.  In response to a question from the 
Ambassador, he asserted that this was not a chicken and egg 
dilemma.  Although all the applicants claimed they had lined 
up through-put guarantees,the Minister said that none could 
demonstrate a binding commitment from oil companies, so the 
GOT was unable to yet reach a decision.  The Minister 
promised a timely response, noting that a prolonged process 
was bad for everyone. 
 
Voluntary Principles for Bosphorus 
---------------------------------- 
 
3.  (SBU) Ambassador also delivered ref a and c demarche on 
USG position on Turkish MFA proposed Voluntary Principles on 
straits oil tankers and bypass pipelines.  While expressing 
support for the GOT's intentions, Ambassador emphasized need 
for 1) truly voluntary and informal dialogue, 2) 
identification of principles and informal codes, not formal 
agreements, 3) participation by Russians, and 4) avoidance of 
prescriptive approaches.  The Minister accepted the 
objections to the text without expressing any specific 
differences of views.  The Minister agreed with the 
Ambassador that there was a need for a diversity of 
pipelines.  He said that in his opinion the market would 
support two pipelines: this could be one trans-Thrace and one 
Samsun-Ceyhan.  The Minister thought another option could be 
an expansion of capacity of the Baku-Tbilisi-Ceyhan pipeline. 
 Moreover, he thought that there could be a link from 
Novorossiysk to Baku. 
 
Odessa-Brody 
------------ 
 
4.  (SBU) Ambassador delivered ref b point on Odessa-Brody 
and asked the Minister if this would likely be raised by the 
GOT with President Putin.  The Minister said that GOT would 
likely NOT raise this issue, but noted that the decision to 
reverse the pipeline was a big mistake for all parties.  He 
emphasized that Odessa-Brody was the counter-example of a 
failed speculative project that drove the GOT's need for 
through-put guarantees in evaluating bypass proposals. 
 
Gas and East-West Corridor 
-------------------------- 
 
5.  (SBU) The Minister raised what he viewed as an enhanced 
bypass opportunity for the Shah Deniz natural gas pipeline if 
it could include Turkmenistan and Kazakhstan gas moving via 
Turkey to Europe.  In this way, Turkey could make a "smooth 
slalom", bypassing both Russia and Iran.  He noted the 
particular challenges facing Turkey given take-or-pay 
contracts and great reliance on Russia (growing with Blue 
Stream).  The Minister said the GOT was at a critical 
decision point for Iranian gas, noting that the arbitration 
case between the two countries continued.  The Minister 
claimed that Russia and Iran had some sort of deal on gas. 
On European demand for Iranian gas, Minister Guler said 
Europe was not in pressing need of the gas from Iran, but 
would like to diversify its sources. 
EDELMAN