US embassy cable - 05ANKARA7067

UNCLAS SECTION 01 OF 02 ANKARA 007067 
 
SIPDIS 
 
SENSITIVE 
 
EUR ALSO FOR DAS BRYZA AND AMB. MANN 
USDOC FOR 4212/ITA/MAC/CPD/CRUSNAK 
DOE FOR CHARLES WASHINGTON 
 
E.O. 12958: N/A 
TAGS: EPET, ENRG, PHUM, EINV, TU, BTC 
SUBJECT: BTC OIL REACHES TURKEY - CEYHAN IN SPRING 2006 
 
REF: ANKARA 6294 
 
Sensitive But Unclassified. 
 
1.  (SBU) SUMMARY: BTC first oil crossed the Turkish 
border from Georgia on November 17.  First tanker loading 
at Ceyhan is expected in spring 2006, which is also the 
expected timing for a first oil inauguration ceremony. 
BTC has addressed complaints filed in the formal OECD 
investment complaint process, citing them as unfounded, 
false, or unfair.  Embassy believes both the complaint 
process and community/environment investment programs are 
efficient and robust.  End Summary. 
 
-------------------------------------------- 
Timing for First Lifting at Ceyhan still TBD 
-------------------------------------------- 
 
2.  (SBU) Lost in the pomp and fanfare of the three- 
leader Blue Stream gas pipeline official inauguration 
(septel), BTC first oil quietly crossed into Turkey from 
Georgia on November 17, marking an important step toward 
completion of the three-country pipeline from Azerbaijan. 
Although the prime contractor in Turkey -- BOTAS -- 
suffered significant delays stemming from the challenge 
of managing multiple subcontractors of varying expertise 
and financial liquidity, comparable delays also 
materialized in Georgia.  The ultimate accountability for 
delay is still unclear (BTC and Botaz point at each 
other) and will be the basis for intense negotiation and 
discussion (the BTC Consortium lent money to BOTAS to 
provide liquidity to complete completion in Turkey, as it 
took over some of the sub-contracts). 
 
3.  (SBU) GOT MFA DDG Energy Mithat Rende told EmbOffs 
that the BTC first oil lifting inauguration was still 
targeted for March 2006.  He said that the GOT planned to 
organize a late morning event at Ceyhan, followed by a PM- 
hosted dinner in Istanbul or Antalya.  Informing Rende of 
Secretary Bodman's desire to attend, visiting DOE 
 
SIPDIS 
Official advised Rende to keep it simple; i.e., consider 
plan for one-day of activities and consider avoiding 
multiple locations.  A BP official confirmed to EnergyOff 
that the company expected the ceremony to be "in the 
spring." 
 
--------------------------------------------- --- 
Seeking Local Buy-in - - Complaints from Outside 
--------------------------------------------- --- 
 
4.  (SBU) BTC allocated $12.3 million to its Community 
and Environment Investment Program in Turkey, aiming to 
promote sustainable social and economic development in 
settlements within the 4 km wide BTC pipeline corridor, 
working with multiple NGO implementers.  BTC 
Environmental and Social Manager Paul Sutherland briefed 
Energy Officer on its detailed response to the report 
generated by the UK OECD investment complaint process rep 
(ref).  Although he did not share the UK report or the 
draft response, he provided point-by-point verbal 
details.   After carefully researching the complaints, 
some alleging discrimination against "minority" groups, 
BTC identified all of them as unfounded, false, or 
unfair.  The BTC rep said that the UK investment rep was 
not adequately briefed on individual village agreements 
and BTC suspects that the Kurdish Human Rights Project or 
others might have pre-coached complainers, either 
pursuing political agendas or encouraging a last shot 
opportunity at BTC's perceived deep pockets. 
 
5.  (SBU) Sutherland described the detailed needs 
assessment process, whereby in each village, BTC, village 
officials, and local reps of the GOT Ministry of Village 
Affairs identified and agreed on community investment 
program goals and contributions of all the different 
parties, including villages.  To gain local buy-in, the 
BTC contribution was intended to be a catalyst and lever 
for meeting community felt needs.  These village 
agreements were documented and made public.  The BTC rep 
cited a number of early successes in livestock artificial 
insemination and irrigation.  In no situation were 
community investment funds to be used for political or 
religious institutions.  Here are a few examples of 
complaints and responses researched by BTC: 
 
-One complainant alleged that other villages got new 
mosques, and they did not, insinuating that this was 
because their village was predominantly Alevi.  Response: 
Absolutely no funds have been dispensed for religious 
purposes. 
 
-Some villagers complained that BTC did not provide 
promised water systems or roads.  Responses: All 
complaints involved: items not agreed to or promised in 
needs assessment agreement; non-performance by third 
parties (not under BTC control) such as a sub-contractor 
engaged by GOT Village Affairs; confusion with separate 
commitments from BOTAS on the separate natural gas spur 
to feed Pump Station One (BOTAS insisted that this be 
separate from BTC). 
 
6.  (SBU) Sutherland asserted that the grievance systems 
for both land appropriation and construction problems 
were robust and working well.   He noted that they were 
transparent and internet-based, and by all measures of 
performances they were succeeding; i.e., successful 
outcomes documented and number of outstanding complaints 
diminishing. 
 
7.  (SBU) The BTC rep also cited numerous instances where 
the project had taken costly measures or delays to 
protect spawning fish, nesting endangered birds, and 
newly-discovered archeological sites (overcoming frequent 
objections from BOTAS).  He noted that many of the 
pipeline block valves were located for environmental 
reasons.  The project has carried out extensive seed 
collection and anti-erosion measures as part of its 
intense land reinstatement program. 
 
8.  (SBU) COMMENT: Embassy agrees with BTC's assertion 
that the complaint process is working and under control. 
The project can serve as a model for international 
pipeline approach to community and environment 
sustainable development.  In a project of such magnitude, 
there will be some lingering construction complaints 
and/or gadflies seeking to take advantage of BTC's deep 
pockets or to advance their own political agendas.  As 
noted in previous reporting (ref), the campaigns of the 
Kurdish Human Rights Project and others are being driven 
from outside Turkey and do not resonate domestically. 
BTC is doggedly working these issues externally and 
transparently.   It is not clear how much of the BTC high 
standards for safety and environment will be taken on 
board by BOTAS when it executes its connection to the 
follow-on South Caucasus natural gas Pipeline (the Turkey 
portion and connection to its grid at Erzurum are 
separate from the international SCP natural gas pipeline 
consortium). 
 
McEldowney