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Cablegate: Expanded Iraqi Energy Working Group Calls For

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DE RUEHIT #0539/01 2961205
ZNR UUUUU ZZH
P 221205Z OCT 08
FM AMCONSUL ISTANBUL
TO RUEHC/SECSTATE WASHDC PRIORITY 8520
INFO RUEHOO/CHINA POSTS COLLECTIVE
RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUCNIRA/IRAN COLLECTIVE
RUCNRAQ/IRAQ COLLECTIVE
RUEHSS/OECD POSTS COLLECTIVE
RUEAIIA/CIA WASHDC
RUEKJCS/DIA WASHDC
RUFOADA/JAC MOLESWORTH RAF MOLESWORTH UK
RUEPGAB/MNF-I C2X BAGHDAD IZ
RHEHNSC/NSC WASHDC
RUEUITH/ODC ANKARA TU
RHMFISS/JOINT STAFF WASHDC
RUEKJCS/SECDEF WASHDC
RHEHAAA/WHITE HOUSE WASHDC

UNCLAS SECTION 01 OF 03 ISTANBUL 000539

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: ENRG IR IZ JO PGOV PREL RS SY TU
SUBJECT: EXPANDED IRAQI ENERGY WORKING GROUP CALLS FOR
GREATER COOPERATION AND BILATERAL MEETINGS

REF: ISTANBUL 129

1. (SBU) SUMMARY: An Expanded Energy Working Group (WG)
meeting on October 11 to assist with Iraq's reconstruction
brought pledges and suggestions on how to best help the
country become energy self-sufficient along with developing
its energy export sector. The first half of the meeting
followed the traditional Neighbor's Energy WG, i.e. briefings
of the electricity and fuel situation in Iraq and what the
neighbors are doing to assist. The second half was focused on
reforming the WG to make it "results based." This included a
suggestion by the UN delegation that this forum also handle
regional problems with pipelines, electric power, and water.
The Turkish hosts made the case for Turkey as an ideal
country to export the region's gas (especially Iraq's) to
Europe. The WG declared in its final statement that the next
meeting may have a parallel private sector event.

--------------------------------
An expanded conference
---------------------------------

2. (SBU) Representatives from Iraq and neighboring states,
along with major countries and international organizations
met in Istanbul on October 11 to discuss how to help Iraq
overcome its energy problems. This meeting comes roughly
six months after a smaller WG also held in Istanbul (reftel
A). The WG provided the Iraqi delegation, led by Iraqi
Electricity Minister Karim Wahid Hassan, an opportunity to
describe Iraq's energy situation and call for assistance from
WG members. The WG members all reacted positively to Iraq's
plight, but differed on how to move forward. Overall, the
response to the expanded WG was positive, because we expect
it will facilitate follow-on bilateral meetings. Of the
neighbors, only Saudi Arabia did not attend the Expanded
Energy WG.


--------------------------------------------- ---------------
Turks Want More Iraqi Energy Exports
--------------------------------------------- ---------------

3. (SBU) Turkish Minister Guler encouraged increased Iraqi
energy exports using the Turkish Mediterranean port Ceyhan,
a major outlet for Iraqi oil. According to Guler, Ceyhan is
not at full capacity for oil exports. Iraqi Director General
of State Oil Marketing Organization (SOMO) Falah Al-Amiri
indicated additional exports of oil to Ceyhan should not be a
problem. Regarding natural gas, Guler argued Iraqi gas could
be piped into Ceyhan and sent to Europe via the U.S.-
supported Nabucco pipeline or via a yet-to-be-built LNG
terminal. Guler stated it would not take long to build a gas
pipeline connecting northern Iraq to Ceyhan. Turks have
expressed an interest in sending 10 BCM of Iraqi natural gas
to Europe through Turkey. Vural Altay, MFA Deputy Director
General for Energy, Water, and Environment, presented three
options for Iraq to send its gas to Europe:
-1) The existing Turkey Greece Gas Interconnector (TGI)
pipeline,
-2) The proposed Nabucco pipeline, or
-3) The proposed LNG terminal at Ceyhan.
Maps in Altay's powerpoint presentation showed a potential
gas pipeline that would go from Kirkuk to Erbil to Cizre, and
finally to Ceyhan rather than paralleling the existing
Iraq-Turkey oil pipeline. (Comment: This is different from
earlier proposals to build a gas pipeline parallel an
existing line. End comment.) According to Guler, the Turkish
Pipeline Company (BOTAS) is ready to help Iraq and the
Turkish Petroleum Company (TPAO) would like to establish a
consortium with international companies to development
upstream gas in Iraq. The Turkish presentation on sending
Iraqi gas through Turkey to Europe was well received by the
EU Commission, but the Iraqis were lukewarm to the idea as
the Iraqi delegation noted it needed to decide on domestic
usage first before contemplating exports of natural gas.


ISTANBUL 00000539 002 OF 003


4. (SBU) Abdulhalim Kasem, the Syrian Deputy Energy Minister
noted his country's agreement to invest in the western Iraqi
gas field Akkas. Note: Syria drilled six wells in Akkas in
the 1990s. End note. Syrian assistance would help generate
power for domestic Iraqi consumption while simultaneously
exporting gas to Europe or the Gulf though the Arab pipeline.
Jordanian Ambassador to Turkey, Fariz Mufti also supported
the Syrian plan to connect Iraq to the Arab pipeline.

--------------------------------------------- ----
Helping Iraq Obtain Sufficient Electricity
--------------------------------------------- ------

5. (SBU) Hassan explained Iraq currently is suffering an
acute electricity crisis caused by three wars, crippling
sanctions, and the looting following the collapse of the
Saddam Hussein regime. Iraq has been unable to invest the
necessary funds to fix the system, Hassan continued, yet
current stable conditions provide an opportunity to rebuild.
According to Hassan, Iraq needs to increase its current
electrical generation capacity threefold to meet demand.
Hassan hoped a conference on electricity project tendering in
Iraq sponsored by the World Bank and UNDP in November will
help Iraq supply its people with power.

6. (SBU) Guler pointed out Turkey sends electricity to Iraq
despite its own shortages. Turkey's Special Envoy to Iraq
Murat Ozcelik added he met with the Turkish private supplier
of electricity to help fix problems regarding power outages.
Ozcelik suggested sending an assessment team to look at both
the Iraqi and Turkish situation and report back to the GOT
and GOI. Al-Amiri agreed, suggesting SOMO could assist with
the assessment, especially regarding problems with shipping
heavy fuel oil to the electrical generating station in
Turkey. Comment: Much of this problem stems from the GOI
payment arrears to the private Turkish firm (Kartet), which
results in power interruptions for "technical" reasons from
Kartet. End comment.

7. (SBU) Kasem said Syria increased its electricity
transmission network from Damascus to Deir oz Zour,
therefore his country is ready to again export electricity to
the Iraqi province Ninewa. Mufti stated Jordan negotiated
with Iraq to build a power station in Jordan dedicated to
export electricity to Anbar province. Hassan Danaeifard,
Iranian Secretary of the Iran-Iraq Economic Development
Headquarters also detailed Iran's commitment to send about
1300 MW of electricity to Iraq (septel).

--------------------------------------------- ------
Problems With Trucking Oil out of Iraq
--------------------------------------------- ------

8. (SBU) Representatives from Iraq, Turkey, Iran (septel),
Syria, Jordan, and Kuwait all mentioned problems with
trucking oil in and out of Iraq. Al-Amiri criticized the
long delays at the Iraq-Turkey Habur Border Gate. Ozcelik
described the need to establish a second border gate with
Iraq to ease the congestion at Habur Gate, reiterating a
long-standing Turkish proposal. Mufti appreciated Iraqi
exports oil to Jordan; however deliveries fall short of
thirty thousand bpd due to Iraqi problems with loading
trucks. Mufti would like to see a pipeline to Zarqa; he
stressed the need to talk more about this project, especially
financing. Kasem agreed with Al-Amiri on the need to
rehabilitate existing oil pipelines with Syria and finalize a
new pipeline. Al-Amiri noted that the K Crossing in Kuwait
was still an issue and that he would like the border crossing
open more than 1-2 hours a day to allow greater quantities of
diesel/gasoil to reach the Musayyib power plant.

---------------------------------
International Support for Iraq
-----------------------------------

9. (SBU) The Russian delegation, headed by Sergey Vershinin,

ISTANBUL 00000539 003 OF 003


MFA Director General for the Middle East and North Africa,
noted Russia's desire to support a united and stable Iraq.
Last February, Russia and Iraq met regarding a commission on
trade. Vershinin also said Russia opened a consulate in
Erbil.

10. (SBU) A number of the neighbors described their efforts
to train Iraqi technicians. Kasem credited Syria with
training 60 technicians from MOE, with an anticipated 83 in
the second phase. Mufti said Jordan trained 30 MOE engineers
in August, and plans to train another 40 with the help of a
Swiss firm. Kansuke Nagaoka, Japanese Minister-Counselor,
credits his country with training 2,500 Iraqi engineers.


11. (SBU) Despite being an Energy Working group meeting,
Syria, Jordan, and Iran (septel) all stressed the strain
placed on their countries by Iraqi refugees. The Syrian
representative said Syria had received the lion's share of
Iraqi refugees, some 2 million, which placed a
disproportionate burden on his country.

-------------------------------------------
Expanded Working Group Format
--------------------------------------------

12. (SBU) Hassan hoped the expanded format for the Energy
Working Group would facilitate separate bilateral meetings
to help Iraq's neighbors obtain an integrated electrical
grid. The October Working Group included many newcomers to
the meetings such as: China, UK, Germany, France, Italy,
Japan, Russia, the EU, the Arab League, EU Commission, and
the Organization of the Islamic Conference. Iraqi Minister
Councilor Mohammed Abdullah Memid also found the expanded
format helpful. Iraqi Chairman of the Energy Committee, Jewad
Al-Hindawi saw the value of the expanded WG to build
necessary contacts to drive bilateral relations. Hindawi
argued against signing agreements or conventions at the
working group, instead the WG should follow-up on problems,
he stated. Vershinin from the Russian Federation agreed,
saying the WG mandate should be defined as "creating an
atmosphere for bilateral and multilateral meetings", yet
there should be no signing of contracts at the WG.

13. (SBU) The Japanese representative would like to see the
private sector participate in future meetings and also
suggested the next WG meeting to be held in Baghdad. Ozcelik
noted bringing private companies in is an idea worth
considering since they can discuss the facts on the ground.
Private companies would also benefit from learning the rules
and regulations of the new business environment. The
Expanded Energy WG agreed to hold a separate event in which
private companies could participate. Ozcelik also supported
holding a meeting in Baghdad if the necessary conditions are
in place to show the progress there, but indicated Istanbul
remains available as a fallback location.


WIENER

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