US embassy cable - 03ANKARA1952

C O N F I D E N T I A L ANKARA 001952 
 
SIPDIS 
 
 
STATE FOR E, EB/CBED, EB/ESC, EUR/SE, NEA/NGA, OPS CENTER 
STATE PASS NSC FOR QUANRUD AND BRYZA 
USDOC FOR 4212/ITA/MAC/OEURA/CPD/DDEFALCO 
USDOE FOR PUMPHREY/ROSSI 
 
 
E.O. 12958: DECL: 03/25/2013 
TAGS: ENRG, ECON, EPET, ETTC, TU, IZ 
SUBJECT: IMPACT OF IRAQ OPERATION ON KIRKUK-YUMURTALIK 
PIPELINE 
 
Classified by EconCouns Scot Marciel, Reason 1.5 (b,d) 
 
 
1. (C) Summary:  BOTAS General Manager Bildaci told us the 
oil flow in the Kirkuk-Yumurtalik (Ceyhan) Pipeline had 
decreased by half and likely would stop completely by March 
26.  Bildaci attributed the slow-down to the lack of oil 
tankers transporting crude from the port at Ceyhan since the 
start of Operation Iraqi Freedom, putting storage at Ceyhan 
at near capacity.  A local shipping exec claims that shipping 
brokers and traders know that the U.N. Oil for Food (OFF) 
program has not been suspended, but are reluctant to offtake 
from Ceyhan due to security and legal uncertainties. 
Turkey,s state owned refinery also has decided not to 
purchase Iraqi crude from Kirkuk for now.  End summary. 
 
 
2. (C) BOTAS General Manager Bildaci told econoff March 24 
that, since the start of Operation Iraqi Freedom, the oil 
flow in the Kirkuk-Yumurtalik (Ceyhan) Pipeline had decreased 
by half and likely would stop completely in 1-2 days. 
Bildaci attributed the slow-down to the lack of oil tankers 
transporting crude from the port at Ceyhan.  He said recent 
average output of the pipeline had been approximately 800,000 
barrels per day (bpd), but had decreased to about 400,000 bpd 
over the last several days.  Bildaci noted that within the 
next 48 hours the 6.5 million barrel storage capacity at 
Ceyhan would be full, and that no tankers had transported 
crude from Ceyhan since March 21.  He added that one 
important impact on Turkey would be the loss of transit 
revenue from the OFF program, which he estimated to be about 
USD 200 million per year. 
 
 
3. (SBU) A local shipping company executive told econoff 
March 24 that shippers, traders, and brokers were generally 
aware that the OFF program had not been suspended.  Further, 
he said, as of COB March 23, insurance underwriters had not 
levied an additional war premium for tankers traveling in and 
out of Ceyhan port.  Still, the exec said, shipping brokers 
for the major oil companies and traders were reluctant to 
offtake from Ceyhan due to the security and legal 
uncertainties arising from the Iraq war.  The shipping exec 
said he had spoken recently to Gulf Agency Management, a 
large shipping broker in Turkey, as well as a large shipping 
broker based in the U.K., both of which had decided not to 
transport crude from Ceyhan at this time, although they were 
aware that OFF had not been suspended. 
 
 
4. (U) Turkey,s state-owned petroleum refinery corporation, 
TUPRAS, told the press on March 20 that, although the 
Kirkuk-Yumurtalik pipeline had not officially closed, TUPRAS 
would not purchase Iraqi crude from this source during the 
war.  TUPRAS said for now it would pursue Black Sea exports, 
i.e. from Russia, to replace the approximately 1.5 millions 
barrels of Iraq,s Kirkuk crude it imports per month.  TUPRAS 
General Manager Danis told the press he did not expect Turkey 
to experience an oil shortage during the war, unless other 
oil-producing countries became actively involved in 
operations. 
PEARSON