US embassy cable - 04ANKARA5698

UNCLAS SECTION 01 OF 03 ANKARA 005698 
 
SIPDIS 
 
SENSITIVE 
 
NSC FOR BRYZA 
 
E.O. 12958: N/A 
TAGS: EPET, EWWT, EMIN, ETRD, EINV, OVIP, TU 
SUBJECT: SECRETARY ABRAHAM,S SEPTEMBER 21 BILATERAL MEETING 
WITH TURKEY ENERGY MINISTER IN ISTANBUL 
 
REF: ANKARA 5306 
 
Sensitive But Unclassified.  Please Handle Accordingly. 
 
(U) Paricipants: 
 
U.S.: 
Secretary of Energy Spencer Abraham 
 
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EUR Special Negotiator Steven Mann 
Consul General David Arnett 
Chief of Staff Joe McMonigle 
Senior Advisor Majida Mourad 
Senior Advisor Mary Hayward 
Embassy Note-taker David Young 
Advisor Chuck Washington 
 
Turkey: 
Minister of Energy and Natural Resources Hilmi Guler 
TPAO (Turkish Oil Company) President Osman Saim Dinc 
Head of Department Cigdem Hatunoglu 
 
1. (SBU) SUMMARY: Secretary of Energy Spencer Abraham and 
Turkey Energy Minister Hilmi Guler covered a range of energy 
issues in a meeting in Istanbul on September 21.  Areas 
identified for continued and deepened cooperation were 
Baku-Tbilisi-Ceyhan oil pipeline completion in mid 2005; 
promotion of Turkey as an East-West Energy Hub; development 
of gas and LNG transshipment and processing capacity; energy 
sector investment, renewable energy; development of energy 
links with Iraq; cooperation on nuclear issues, both 
non-proliferation and potential peaceful use of nuclear 
energy in Turkey; and a US-Turkish energy conference.  The 
Secretary encouraged Minister Guler to visit the U.S. to 
 
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facilitate cooperation and information sharing.  He promised 
that expert areas within his agency and the USG would follow 
up on opportunities in the areas mentioned.  The Energy 
Bilateral was followed by a short press conference; 
subsequent local press coverage was uniformly positive, 
stressing cooperation and mutual interest.  End Summary. 
 
Baku-Tbilisi-Ceyhan (BTC) ) When to crack the champagne? 
--------------------------------------------- 
 
2.  (SBU)  In their September 21 bilateral meeting in 
Istanbul, Secretary of Energy Spencer Abraham and Minister of 
Energy and Natural Resources Hilmi Guler lauded the imminent 
completion of Baku-Tbilisi-Ceyhan (BTC) Pipeline as symbolic 
of their countries, strong cooperation and commitment to 
promotion of Turkey as an East-West Energy Hub.  Minister 
Guler stated that the BTC oil pipeline project was 80 percent 
complete and on time.  He noted that physical completion 
would be substantially complete by the end of 2004 and 
testing and pipeline oil fill would allow first oil flow in 
June 2005, offering a propitious time for potential 
celebration in Ceyhan.  Both parties noted that there was 
still some risk of problems and delays in Georgia that 
required constant vigilance and potential action. 
 
Turkey as East-West Energy Hub 
------------------------------ 
 
3.  (SBU)  Secretary Abraham praised Turkey,s critical role 
for regional energy leadership and as a growing East-West 
Energy Hub.  The Secretary stressed USG concerns about 
growing global demand, underscoring the need for increasing 
amounts and diversity of supply.  Minister Guler noted that 
he had responsibility for water, mining, and other natural 
resources and sought increased cooperation in those areas. 
He applauded Secretary Abraham,s desire to take a tour on 
the Bosphorus to see first-hand the need for a timely 
Bosphorus by-pass oil pipeline project. 
 
Gas Potential ) Iraq, but, not from Iran 
---------------------------------------- 
 
4.  (SBU)  The Director of Turkish Petroleum Company (TPAO) 
Osman Saim Dinc described his company,s strong interest in 
resuming gas and oil exploration in Iraq, noting the 
concentration of people and resources the company maintains 
in nearby SE Turkey.  He said they were working with Baghdad 
to resurrect some of these opportunities aimed at transit 
through Turkey to Europe.  The Secretary said these were 
shared goals and big opportunities for Iraq.  He called for 
greater collaboration between Turkey and Iraq on energy 
exploration and development.  The Minister and TPAO Director 
also highlighted other gas opportunities in the region and 
Caspian.  They described Turkey,s planned LNG facility for 
Ceyhan.  Noting rising U.S. and world demand for natural gas 
and LNG and desire for diversified sources and trade, 
Secretary Abraham expressed support for such a project in a 
 
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stable, friendly country like Turkey.  He hoped that Ceyhan 
to U.S. could be a gas transit route and partnership, but 
commented that any incremental gas for export would be 
beneficial in the world gas market.  Ambassador Steve Mann 
also stated that such a LNG facility would facilitate drawing 
out other Central Asian/ Caspian gas, &as long as it is not 
Iranian8.  Minister Guler expressed interest in working 
towards transiting Turkmen gas via Azerbaijan and Turkey, 
thus avoiding Iran and Russia and therefore more &safe8. 
Guler stated that Caspian gas was a priority, but noted the 
growing interest from Europe in Iranian gas.  Ambassador Mann 
noted previous unsuccessful efforts to bring Turkmen gas, but 
expressed willingness to try again if Turkey could also play 
a persuasive role. 
 
5.  (SBU) The Turkish side expressed praise and thanks for 
the continued efforts of Ambassador Steve Mann in working on 
the challenge of getting hydrocarbons safely out of the 
region.  Secretary Abraham recognized Ambassador Mann,s 
active contributions and stated that his agency and the USG 
would remain excited to help by diplomatic and technical 
means. 
 
Renewable Energy 
---------------- 
 
6.  (SBU) Minister Guler described Turkey,s growing interest 
in renewable energy such as hydroelectric and solar.  The 
Secretary and Minister compared notes on challenges of 
 
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enacting new energy bills with incentives for these and other 
energy reform aspects.  The Minister noted that Turkey could 
take advantage of opportunities to export electricity from 
renewable sources to European countries with renewable 
quotas.  The Minister also expressed support for the USG 
hydrogen projects, noting that Turkey held 65 percent of the 
world,s boron, an important carrier for hydrogen.  He also 
stated that the GOT had established a hydrogen research 
center in Istanbul.  Secretary Abraham agreed that there was 
a need for additional cooperation in these areas.  (Note: DOE 
Renewable Energy and Hydrogen expert Robert Dixon will be 
visiting Turkey as the featured speaker in the OES Public 
Diplomacy Program October 11-15.  End Note.) 
 
Nuclear- non-proliferation and peaceful use 
------------------------------------------- 
 
7.  (SBU)  Secretary Abraham briefly described the IAEA 
meetings in Vienna he had just attended, emphasizing the dire 
problems posed by Iran,s illegal nuclear program.  He noted 
the dramatic counter-example of Libya, with whom he had had a 
bilateral in Vienna, commending their decision to take timely 
steps to embrace acceptable behavior to rejoin the world 
community.  The Secretary drew attention to his interest in 
working more closely on critical nuclear non-proliferation 
issues.  He stressed the USG readiness to share expertise, 
equipment, and tools with our friends on these programs.  In 
response, Minister Guler stressed his equal desire to work 
together on these programs.  He acknowledged recent receipt 
of the proposed Statement of Intent and regretted that there 
had not been adequate time to get to the point of agreement 
and signing.  The Secretary said he looked forward to 
eventually bringing that to fruition, but in the meantime he 
hoped to move forward on the actual cooperative activities. 
Noting a projected shortfall in energy supply, Minister Guler 
expressed the desire for assistance on gaining investment and 
technology for nuclear power generation capacity.  The 
Secretary noted the expertise within his agency and U.S. 
 
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companies and stated that we could work together in this 
area. 
 
Other opportunities 
------------------- 
 
8. (SBU) The Secretary acknowledged his willingness to 
support a US-Turkish energy conference, specifically 
mentioning that DOE had held a similar, very successful event 
with the Algerians in 2002, and he noted that the event 
brought policy makers, energy experts, government officials, 
and business leaders from both sides together, thus enhancing 
cooperation and reducing barriers. (Note: The Secretary was 
specifically referring to the US-Algerian Ministerial LNG 
Summit that was co-hosted by the Secretary and Algerian 
Energy Minister Chakib Khelil.)  The Secretary also noted 
that DOE was planning to send a team of technical experts to 
Turkey to discuss various energy related issues with their 
Turkish counterparts. 
 
9. (SBU) Minister Guler briefly described on-going 
liberalization of Turkey,s electricity sector, noting that 
transmission would remain with the state, but production, 
distribution, and trading entities would be privatized.  He 
expressed desire for U.S. company participation in these 
opportunities.  Secretary Abraham noted that the USG had 
played a role in bringing various partners together in 
assisting electricity and energy reform processes in 
countries like Italy, Algeria, and others.  (In separate 
meetings with the Minister, he has been reminded about U.S. 
concern about some energy investment disputes involving U.S. 
companies, always with emphasis on the need to propose and 
implement solutions guided by contract sanctity and the need 
to maintain a welcoming and transparent investment 
environment.) 
 
10. (SBU) In a separate meeting with Minister Guler, 
Ambassador Steve Mann stressed the importance of GOT and USG 
reinforcing each others, messages on stepping up support for 
the Aktau (Kazakhstan) link to BTC, keeping BTC construction 
on track in Georgia, working to access Turkmenistan natural 
gas, and remaining tough on Iran. 
 
11.  (SBU) Comment: Embassy expresses its appreciation to all 
parties which helped bring this successful visit to fruition, 
allowing a useful and timely meeting of our energy ministers 
in Turkey.  It will be important to assure timely follow-up 
in all areas cited in the meeting.  End Comment. 
 
12.  (SBU)  This message was cleared by Secretary Abraham's 
staff. 
EDELMAN