US embassy cable - 03ANKARA3036

C O N F I D E N T I A L ANKARA 003036 
 
SIPDIS 
 
 
STATE FOR E, EB, EUR/SE, NEA/NGA 
STATE PASS NSC FOR QUANRUD AND BRYZA 
USDOC FOR 4212/ITA/MAC/OEURA/CPD/DDEFALCO 
USDOE FOR PUMPHREY/ROSSI 
 
 
E.O. 12958: DECL: 05/09/2013 
TAGS: ENRG, ECON, PREL, ETTC, TU, IZ 
SUBJECT: MFA INQUIRY ON KIRKUK-YUMARTALIK PIPELINE 
 
REF: STATE 122029 
 
 
Classified by A/DCM Scot Marciel, Reason 1.5 (b,d) 
 
 
1. (U) This cable contains an action request.  See para 5. 
 
 
2. (C) MFA Deputy Director General For Energy Hakki Akil 
called in Acting DCM May 8 to raise two issues of GOT concern 
related to the stoppage of oil flow in the Kirkuk-Yumurtalik 
pipeline.  First, Akil said, Turkey's Kirikkale Refinery, 
which was designed to process Iraqi crude, was facing a 
serious oil shortage.  Akil said Kirikkale, which was 
supplied entirely by Iraqi crude diverted from the 
Kirkuk-Yumurtalik pipeline (by direct pipeline link to the 
refinery), had not received a shipment in at least two 
months.  He said there had been four shipments of 106,000 
tons each scheduled from March 14 through the first week of 
May, none of which had been delivered.  Akil noted that 
Kirikkale could process other oil if necessary, but at 
considerable extra cost due to extra operating expenses and 
required technical changes. 
 
 
3. (C) The second, related issue, Akil said, was the negative 
impact the lack of oil flow in the Kirkuk-Yumurtalik pipeline 
was having on the pipe and the storage tanks at Ceyhan.  Akil 
claimed that Iraq's water separation system was inadequate; 
as a result, its oil had four to five percent water content. 
When left sitting in pipes or oil tanks for more than one 
month, this water began to have a corrosive effect. 
 
 
3. (C) Akil said he understood the U.S. tied the resumption 
of Kirkuk-Yumurtalik oil flow to the lifting of sanctions, 
but asked if an exception could be made in this case.  He 
said we could kill two birds with one stone -- the U.S. could 
justify the need to restart the flow in order to prevent 
further corrosion, and Turkey could then supply Kirikkale 
Refinery with Iraqi crude.  Akil said the quantity did not 
have to be great, i.e. the 424,000 tons that had been 
scheduled but not shipped in the previous two months would be 
sufficient.  Akil suggested the profit from this oil could 
even be set aside in a non-U.N. escrow account. 
 
 
4. (C) Comment and action request:  In presenting reftel 
demarche on lifting UN sanctions on Iraq to MFA Deputy U/S 
Kilic (septel), A/DCM noted that the best way for Turkey to 
address this oil problem would be to strongly support our 
proposed UNSC resolution.  Embassy would appreciate any other 
thoughts/guidance Department might have on the MFA's inquires. 
PEARSON