US embassy cable - 05ANKARA7078

UNCLAS SECTION 01 OF 02 ANKARA 007078 
 
SIPDIS 
 
USDOC FOR 4212/ITA/MAC/CPD/CRUSNAK 
DOE FOR CHARLES WASHINGTON 
 
SENSITIVE 
 
EUR ALSO FOR DAS BRYZA 
 
E.O. 12958: N/A 
TAGS: EPET, ENRG, EWWT, SENV, TU, IT, RU 
SUBJECT: TURKEY-RUSSIA-ITALY: BLUE STREAM FANFARE AND ADO 
 
REF: (A) ANKARA 6769, (B) ANKARA 6310 
 
Sensitive But Unclassified. 
 
1.  (SBU) SUMMARY: Despite Turkey's hopes to spin the 
official opening of the Blue Stream natural gas pipeline 
(under the Black Sea from Russia; constructed by Italian 
firm ENI) into tangible support for other energy 
corridor/hub dreams, the leaders departed Turkey without 
further concrete commitments.  While ENI had announced 
one week before its plans to develop GOT's Samsun-Ceyhan 
oil pipeline proposal (ref A), the Turks were unable to 
get firm commitments from the Russians and Italians on 
this project or other gas projects that would promote 
development of Ceyhan as an energy hub.  End Summary. 
 
2.  (SBU) The Blue Stream natural gas pipeline was 
officially inaugurated on November 17, 2005 at Samsun, 
Turkey, with the participation of Turkish Prime Minister 
Tayyip Erdogan, Russian President Vladimir Putin and 
Italian Prime Minister Silvio Berlusconi.  The $3.5 
billion, 1,265 km pipeline crosses under the Black Sea at 
depths up to 2,150 meters and began operating in 2003. 
Currently the pipeline is moving 3.2 BCM of gas per year, 
but is intended to eventually carry up to 16 BCM per year 
for a 25-year term as operations gradually ramp up. 
Russian Gazprom is the main owner/operator of the 
pipeline.  Italian ENI built the pipeline and Turkish 
BOTAS owns and operates the Samsun-Ankara segment. 
 
--------------------------------------------- -------- 
You Say More Gas and I say Oil Bypass - Talk is Cheap 
--------------------------------------------- -------- 
 
3.  (SBU) As in four previous high level meetings between 
Erdogan and Putin, the summit announcements were long on 
wish list areas of cooperation but short on detailed 
commitments and time-frames.  The Turks hoped for 
tangible support for the Samsun-Ceyhan oil pipeline as a 
long-favored Bosphorus "bypass" route (competing most 
directly with a Russia-favored Burgos-Alexandropolos 
Bulgaria-Greece bypass), as well as commitments to extend 
the gas pipeline along a similar route to Ceyhan - with 
hoped for gas-processing facilities and gas re-export 
rights.   The Russians were non-committal on the oil 
pipeline, saying that they would have to do further 
analysis (and/or a separate feasibility study in the new 
year, but without committing to funding a full-blown 
study).  Instead, President Putin announced that Blue 
Stream capacity should be doubled to 30 BCM.  As for 
Berlusconi, he failed to deliver any energy commitments; 
rather, he announced that not only Turkey, but Russia as 
well, should join the EU. 
 
4.  (SBU) In a press conference, Energy Minister Guler 
was careful to emphasize that the Russians were not 
against Samsun-Ceyhan oil pipeline.  He forecast that 
there would soon be an inter-governmental agreement 
between Turkey/BOTAS and Russia/Gazprom for the 
commitment of oil throughput in the project.  Guler 
stated that technical feasibility studies would be 
carried out in 1-2 months.   On natural gas, he also 
spoke optimistically about cooperation on an LNG terminal 
at Ceyhan, but there was not a firm agreement. 
 
5.  (SBU) GOT MFA DDG Energy Mithat Rende, speaking 
November 28 with EmbOffs, was persistently upbeat on 
Samsun-Ceyhan prospects.  He claimed that PM Berlusconi 
had expressed support at the Blue Stream ceremony.  Rende 
admitted that the Russians had said that they would put 
off another look until 2006 (Note: they reportedly 
continue to favor Burgos-Alexandropolos.  End Note.)  He 
asserted that for the first time the Russians recognized 
tanker passage in the Turkish Straits as a problem. 
Rende made a new point that the GOT aimed to reduce 
Bosphorus tanker traffic from current 140 mm tons p.a. to 
60 mm tons, without any details on how they would arrive 
at this significant reduction. 
 
6.  (SBU) Chevron reps briefed EmbOffs on November 30 on 
their year and a half analysis of Bosphorus bypass 
options.  Their conclusion is that - while they remain 
open to all options - there is not a clear economic 
justification for a bypass.  Front-runners would be 
Burgos-Alexandropolos or trans-Thrace.  The Chevron reps 
observed that the Turkish dogged position on Samsun- 
Ceyhan is imbued with prestige visions of Ceyhan as 
energy hub and political-military concerns about reliance 
on the Aegean Sea for shipping.  They called for clear 
focus on maritime shipping safety (including greater 
vetting of Black Sea ports), and they expressed concern 
about the GOT adopting "manipulation" to accomplish goals 
to reduce tanker traffic. 
 
7.  (SBU) COMMENT: It is not clear why the official 
inauguration for Blue Stream was delayed two years from 
first operation.  Turkey was clearly hoping to deliver 
other commitments with the splash, but appeared to fail 
to obtain further firm impetus to its long favored Samsun- 
Ceyhan oil pipeline.  A number of major oil companies are 
looking seriously at the project, but the elusive 
throughput commitment is not in the bag.  Some observers 
attribute the late Blue Stream inauguration to 
embarrassment over the notorious lack of transparency of 
the deal.   Others express concern that the Russians are 
seeking to create additional control and pipelines 
through Turkey and Europe to prevent the Caspian/Central 
Asia - Central Europe Nabucco project from materializing. 
While Russia is a natural and important energy partner 
for Turkey- and has shown some flexibility on Turkey's 
gas surplus from take-or-pay commitments - Turkey 
purchases well over 60% of its natural gas from Russia, 
so it is risky to increase its dependence. 
 
8.  (SBU)  The oft-floated idea of an international 
public-private conference on shipping safety in the 
Turkish Straits (i.e., not necessarily focused only on 
bypass) could be a productive way forward.  The challenge 
would be to gain broad and appropriate participation and 
avoid pre-canned positions (perhaps multiple meeting; 
perhaps hosted in Turkey by a third party, like the IEA). 
GOT has long championed an idea like this.  Chevron is 
open to it. 
McEldowney