US embassy cable - 03ANKARA935

C O N F I D E N T I A L ANKARA 000935 
 
SIPDIS 
 
 
STATE FOR E, EB/CBED, EB/ESC, EUR/SE 
STATE PASS NSC FOR QUANRUD AND BRYZA 
USDOC FOR 4212/ITA/MAC/OEURA/CPD/DDEFALCO 
USDOE FOR PUMPHREY/ROSSI 
 
 
E.O. 12958: DECL: 02/05/2013 
TAGS: ENRG, ECON, EPET, AJ, GG, KZ, TU 
SUBJECT: TURKISH PETROLEUM OPTIMISTIC ABOUT BUSINESS IN A 
POST-SANCTIONS IRAQ 
 
REF: ANKARA 6593 
 
 
Classified by EconCouns Scot Marciel, Reason 1.5 (b,d) 
 
 
1. (C) Summary:  The Turkish Petroleum Agency (TPAO) is 
optimistic about business opportunities in a post-sanctions 
Iraq.  TPAO Vice President Bakiler believes TPAO will be 
well-placed to sign exploration and production agreements 
that the company has been negotiating for years with Iraq, 
and to finalize the 1997 "Agreement on Iraq Natural Gas 
Exports to Turkey."  TPAO has no current business activity in 
Iraq, other than three rigs and 15 employees still in-country 
after recently completing a drilling contract.  End summary. 
 
 
2. (C) Turkish Petroleum Agency (TPAO) Vice President Can 
Bakiler told econoff February 4 that TPAO is optimistic about 
business opportunities in a post-sanctions Iraq.  Bakiler 
said that, after U.N. sanctions were lifted, TPAO should be 
in a good position in three particular areas:  exploration, 
production, and realization of the Iraq-Turkey Natural Gas 
Project (reftel).  On exploration, Bakiler said, TPAO had 
been in discussions with the Iraqi Ministry of Oil since 1994 
to form a joint venture for hydrocarbon exploration in Iraq. 
Although they had never finalized a contract, the basis of an 
agreement existed.  Bakiler opined that, once sanctions were 
lifted, TPAO should be well-placed to begin exploration 
activities. 
 
 
3. (C) Bakiler reported that TPAO had also negotiated with 
the Iraqi Ministry of Oil for years on development of the 
Gharraf Oil Field.  Again, a contract had never been signed, 
but the groundwork for an agreement had been completed. 
Bakiler noted that the 1997 "Agreement on Iraq Natural Gas 
Exports to Turkey" called for the development of five Iraqi 
gas fields for the purpose of export to Turkey (reftel). 
Bakiler said TPAO hoped to move forward with Iraq on the gas 
deal, as well as the exploration and production agreements, 
immediately after sanctions were lifted. 
 
 
4. (C) Commenting on TPAO's current activities in Iraq, 
Bakiler stated that the international subsidiary of the 
company, TPIC, had recently completed a U.N.-approved turnkey 
contract to drill 20 wells in northern Iraq, in the region 
between Kirkuk and Mosul.  Most of the 45 TPAO employees 
working on this contract had left Iraq, with only about 15 
personnel remaining.  (Note:  Bakiler noted that only retired 
TPAO employees working on contract were sent to Iraq.)  In 
addition, three of TPAO's oil rigs still remained in Iraq, 
near the site where the drilling work was done.  Bakiler 
claimed that TPAO had not yet decided whether to evacuate its 
personnel or the rigs.  The rigs were about 25 years old, and 
therefore only worth about USD 1-2 million each; therefore, 
they likely would remain in Iraq.  Bakiler asked econoff if 
the U.S. could confirm whether oil rigs in the region between 
Kirkuk and Mosul had a high risk of being destroyed in the 
case of a military operation. 
PEARSON