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Cablegate: Trilateral Iraq Gas Group Meets for First Time in Istanbul

VZCZCXRO8681
RR RUEHBC RUEHDA RUEHDE RUEHIHL RUEHKUK
DE RUEHAK #0614/01 0780739
ZNR UUUUU ZZH
R 190739Z MAR 07
FM AMEMBASSY ANKARA
TO RUEHC/SECSTATE WASHDC 1362
INFO RUCNRAQ/IRAQ COLLECTIVE
RUCPDOC/USDOC WASHDC
RHEBAAA/DEPARTMENT OF ENERGY WASHDC
RHEFDIA/DIA WASHDC
RUEHAK/USDAO ANKARA TU
RUEAIIA/CIA WASHDC
RUEKJCS/SECDEF WASHDC//USDP:PDUSDP/ISA:EUR/ISA:NESA//
RHEHAAA/NSC WASHDC
RUEUITH/ODC ANKARA TU
RUEKJCS/JOINT STAFF WASHDC//J-3/J-5//
RUFOADA/JAC MOLESWORTH RAF MOLESWORTH UK
RHMFIUU/HQ USEUCOM VAIHINGEN GE
RHMFISS/HQ USCENTCOM MACDILL AFB FL
RHMFIUU/425ABS IZMIR TU//CC//
RHMFIUU/39ABG INCIRLIK AB TU
RUEPGAB/MNF-I C2X BAGHDAD IZ

UNCLAS SECTION 01 OF 02 ANKARA 000614

SIPDIS

USDOE FOR CHARLES WASHINGTON
USDOC FOR 4212/ITA/MAC/CPD/CRUSNAK

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: ENRG EPET PREL TU IZ
SUBJECT: TRILATERAL IRAQ GAS GROUP MEETS FOR FIRST TIME IN ISTANBUL

REF: A) 06 ANKARA 6745
B) 06 ANKARA 6690 AND PREVIOUS

1. (SBU) SUMMARY: U.S., Turkish, and Iraqi officials met March 9 in
Istanbul to discuss potential development of Iraq natural gas
production for domestic use and export via the "Southern Corridor"
network of gas pipelines to Europe. The group agreed to cooperate
on attracting gas sector investment, pipeline security, development
of oil/gas pipeline networks, electricity generation, and Iraq's
national master plan for gas production and distribution.
Participants agreed to meet again at a date to be determined. The
immediate next step is to coordinate drafting an action plan to
identify opportunities and overcome (some significant) obstacles to
stimulating gas production in Iraq. End Summary.

--------------------------------------------- --
Emphasis on Collaboration - Long-term Potential
--------------------------------------------- --

2. (SBU) EUR DAS Matt Bryza, supported by a team from NEA, EEB, and
Embassies Baghdad and Ankara, represented the USG. The Turkish
delegation was led by Energy Minister Hilmi Guler, who was
accompanied by senior representatives of his ministry, state
pipeline company BOTAS, and state oil company TPAO, as well as MFA
Deputy Iraq Coordinator Murat Ozcelik. Iraq was represented by
Hunar Hassan, DG of the North Gas Company. The Iraqi Embassy did
not attend.

3. (SBU) All parties stressed that the meeting was a first step.
Guler emphasized Turkey's desire to help Iraq increase security and
meet domestic energy needs, and urged consideration of sending
excess gas to Turkey for consumption in Turkey and export to Europe.
Hassan described the difficult situation in Iraq, underlining that
Iraq was in dire need of new investment to help it stem gaps in
provision of electricity and natural gas. Bryza stressed
U.S.-Turkey energy cooperation, including collaboration on a
"southern gas corridor" to help Europe diversify its gas supplies.
He emphasized that this meeting was a first step among the three
countries to expand gas production in Iraq. Bryza urged the group
to focus on attracting investment to Iraq's gas sector to help
satisfy Iraq's domestic needs an allow export to Turkey and Europe.


------------------
Turkey Offers Help
------------------

4. (SBU) Minister Guler urged Iraq to consider export of gas to
Turkey for Turkish consumption, potential LNG processing at Ceyhan,
and pipeline export to Europe. He stressed that Turkey's BOTAS
could provide technical assistance and training on pipeline
security, particularly for the oft-sabotaged Kirkuk-Ceyhan oil
pipeline. TPAO offered a presentation on how Turkey could assist
Iraqi gas development, emphasizing the company's previous experience
in northern Iraq. The company noted that it had personnel and
materials positioned in close proximity to Iraq, and deep geological
knowledge of northern Iraq. The TPAO team estimated Iraq's proven
gas reserves at 3 tcm, as well as potential reserves at 3 tcm. TPAO
identified a number of promising regions: "Zone A" in the north
comprising 500 BCM non-associated gas; "Zone B" in the north with
480 BCM associated gas; and "Zone C" in the south with 2000 BCM.
TPAO worked with Shell in a 2004 study that concluded there was
significant gas export potential. BOTAS stressed that Iraqi gas
sources could be connected to the Turkish grid about 240 km from the
border near Diyarbakir or there could be a new gas pipeline parallel
to the Kirkuk-Ceyhan pipeline. BOTAS said they had great
expectations for Iraqi providing up to 10 BCM of natural gas per
year that could help fill the Nabucco pipeline to Europe.

5. (SBU) Iraqi rep Hunar Hassan stated that Iraq welcomed
assistance from the U.S. and Turkey. Noting significant oil
reserves of 115 billion barrels and ample reserves of gas, he said

ANKARA 00000614 002 OF 002


that once security was attained Iraq was committed to attract
investment to develop these resources. Hassan said the Iraqi
government is focused on bringing the hydrocarbon law to completion,
which he was confident would happen over the next few months. He
said Iraq would need to rehabilitate existing power plants and
rebuild the petroleum industry, which would require over $20 billion
in investment.

6. (SBU) MFA Deputy Iraq Coordinator Murat Ozcelik stated that --
in order to move forward on cooperation on energy and other areas --
Turkey wanted to resolve its problems with Kurds in northern Iraq.
He pointed out that he would be attending the P-5 plus neighbors
meeting in Baghdad the following day. After Mr. Hassan indicated
that he was an ethnic Kurd who observed harmony among Kirkuk's
varied ethnic groups throughout his life, the MFA rep stated that
Turkey needed to resolve its problems with the Kurds to assure a
healthy relationship with Iraq.

----------
Next Steps
----------

7. (SBU) Bryza suggested that the group forge the following topics
into an action plan for trilateral cooperation:

- Improving the investment climate, building on Iraq's new
hydrocarbon law, (which parliament had not yet enacted);
- Providing technical assistance and training for pipeline
security;
- Finalizing and implementing the national gas plan, with a focus on
increasing production for both domestic consumption and potential
export;
- Cooperating on augmenting Iraq's electricity provision, including
considering increased export from Turkey;
- Assisting in developing a broader oil and gas pipeline network,
including extensions to Turkey for export.

8. (U) The immediate next step is to coordinate drafting of an
action plan, including identifying a date and location for a next
meeting. Embassy will work with the Department and the Turkish
Ministry to make this happen.

9. (U) This cable was cleared by EUR DAS Matt Bryza.

Wilson

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