US embassy cable - 05ANKARA323

UNCLAS SECTION 01 OF 02 ANKARA 000323 
 
SIPDIS 
 
SENSITIVE 
 
USDOE FOR CHARLES WASHINGTON 
USDOC FOR ADVOCACY CENTER AND 
4212/ITA/MAC/OEURA/CPD/DDEFALCO 
NSC FOR BRYZA AND MCKIBBEN 
 
E.O. 12958: N/A 
TAGS: EPET, ENRG, TU 
SUBJECT: TURKEY: BOSPHORUS BYPASS VOLUNTARY PRINCIPLES AND 
LICENSES; NOTHING APPEARS NEW WITH RUSSIA ENERGY 
 
REF: A. 04 ANKARA 6484 
 
     B. 04 STATE 178586 
 
This is an action request.  See paragraphs 2 and 3. 
 
1.  (SBU) SUMMARY: The Turkish government still seeks to 
pursue its proposed "Voluntary Principles on the Turkish 
Straits" as a way to engage all stakeholders in seeking a 
solution to the risks of growing tanker congestion.  The GOT 
is interested in U.S. comments and support for this proposal, 
as well as U.S. technical advice on moving forward on 
conditional licenses for Bosphorus bypass oil pipelines in 
Turkey.  Despite great expectations for new or more detailed 
Turkey-Russia energy agreements from PM Erdogan's recent trip 
to Moscow, per early read-out nothing new was realized.  End 
Summary. 
 
2.  (SBU) VOLUNTARY PRINCIPLES: Mithat Rende, new GOT MFA 
Deputy Director General for Energy and Water, told us January 
13 that the GOT still aims to pursue proposed "Voluntary 
Principles on the Passage of Oil Tankers through the Turkish 
Straits" (Ref A) as a way to engage stakeholders.  We 
reiterated general concerns from Ref B.  Rende welcomed U.S. 
views and said he would appreciate U.S. comments on the 
latest draft of the principles (Ref A).  He said the GOT 
would welcome whatever role or support the USG could provide 
for the principles.  Rende said he envisioned next steps to 
include collecting comments, engaging all parties, and 
eventually convening a conference of stakeholders. 
 
3.  (SBU) BOSPHORUS BYPASS CONDITIONAL LICENSES: Rende asked 
for an explanation of the "conditional licence" that has been 
supported by USG advocacy on behalf of developers of 
potential "bypass" oil pipelines across Turkey.  We described 
a conditional license as comprising permission from the GOT 
to build a pipeline of an identified capacity and specific 
route contingent upon within six months the project sponsor 
obtaining all of the following: an oil throughput commitment, 
financing commitment, and international standard 
environmental impact assurance.  Rende asked for additional 
guidance, specific language, or examples that could help him 
explain and generate an acceptable conditional license, 
saying he could not understand why such a government license 
was needed to obtain these commitments.  He thought that the 
granting of multiple conditional licenses could be an 
effective way forward.  Embassy requests Department and DOE 
advice on conditional licenses to provide to the GOT. 
 
4.  (SBU) NOTHING NEW WITH RUSSIA: Like Putin's visit to 
Ankara in early December 2004, PM Erdogan's recent visit to 
Moscow - with multiple planeloads of business people - 
appears in first analysis to have failed to meet high 
expectations for energy deals.  Again, press reports and 
Embassy contacts describe a broad umbrella memorandum of 
intent to invest, but no specific commitments.  The targeted 
investment areas comprise electricity (including nuclear) and 
natural gas sectors, including possible extension of the Blue 
Stream natural gas pipeline to Ceyhan with a possible LNG 
terminal at Ceyhan and/or a pipeline to tran-ship gas to 
Israel.  There was reportedly no specific agreement on 
reducing the price of natural gas.  There also apparently was 
no agreement on a specific Bosphorus bypass route.  According 
to Rende, the Russians expressed a preference for the 
cheapest route (presumably trans-Thrace) and the Turks 
expressed a preference for the most environmentally benign or 
sustainable (presumably their favored Samsun-Ceyhan route). 
 
5.  (SBU) COMMENT: Rende is getting up-to-speed on his new 
portfolio and seems very willing to seek U.S. advice and 
help.  He said that he would be willing to travel to the U.S. 
to discuss Bosphorus issues.  Although sometimes hard to pin 
down in contacts we have had with him over the years, Rende 
has always appeared wary of any move that would make Turkey 
too dependent on Russia.  In the present case, he is firmly 
reaching out to the U.S. - as is also the Minister of Energy 
- to try to ensure that Turkey limits Russia influence.  The 
recent announcement of the three-country political agreement 
for the proposed AMBO trans-Balkan Bosphorus bypass pipeline 
may be a wake up call for the GOT.  Even though there are 3-4 
proposed projects on 2 routes solely in Turkey's territory, 
the GOT still targets political agreements (so far apparently 
unsuccessfully with Russia) and is otherwise still unable or 
unsure how to proceed.  The GOT appears stuck on how to 
fashion conditional licenses to enable project sponsors to go 
to the market and keep a Turkey based route in the running. 
We may be able to help with this.  The "Vountary Principles" 
remain a potentially parallel process to engage stakeholders 
in improving maritime safety and exploring faciliting 
potential pipelines, while not impeding project sponsors 
changing the reality on the ground (or on the water) by 
seeking commitments from the market. 
 
6.  (SBU) COMMENT CONTINUED: We have encouraged our 
interlocutors to engage the Russians to promote avoidance of 
zero sum thinking, while pointing out the risk of 
over-dependence on companies that have engaged in 
monopolistic behavior.  Russia will likely ultimately be a 
part of a viable Bosphorus bypass solution.  At the same 
time, and in response to keen interest expressed by Minister 
of Energy Guler, we will need to work closely with Turkey to 
facilite east-west transit of natural gas to Europe from 
Azerbaijan - and potentially from Turkmenistan - but not from 
Iran.  Turkey will have to work to insure that Russian 
influence does not work against this goal.  In this regard, 
Guler and people like Rende look to the U.S. for advice and 
support. 
EDELMAN