Cablegate: Bosphorus Voluntary Principles and Thrace Bypass

This record is a partial extract of the original cable. The full text of the original cable is not available.





E.O. 12958: N/A

REF: A. A. STATE 178586
B. B. STATE 178695

SENSITIVE BUT UNCLASSIFIED. Please Protect Accordingly.

1. (SBU) SUMMARY: Acting Econ Counselor delivered ref a and
b demarches to GOT MFA Energy Deputy Director Hakki Akil.
Akil expressed strong disappointment at USG objections to
"Voluntary Principles on straits oil tankers and bypass
pipelines." He denied press reports that the GOT was
supporting the Transneft sponsored trans-Thrace bypass
project; rather, he insisted that the five bypass projects
were still under analysis in the relevant ministries for
environment and route issues. Akil noted that the
trans-Thrace routes, including the Thrace Development Company
project (with U.S. company involvement), faced growing
environmental opposition. The GOT official insisted that the
GOT permitting process was transparent and fair.
PolCounselor delivered same demarches to Prime Ministry's
chief foreign policy advisor Davutoglu. In a separate
meeting with Ambassador, ChevronTexaco officials expressed
support for multiple Bosphorus bypass pipelines and the
concept of "Voluntary Principles", but asserted that there
would be no success without involvement of Russian companies
and the governments of Black Sea countries. Action request
at paragraph 10. End Summary.

Disappointment on Voluntary Principles

2. (SBU) Acting EconCounselor and EconOff delivered ref a
demarche on the USG position on the Turkish MFA proposed
"Voluntary Principles" to GOT MFA Energy Deputy Director
Hakki Akil on August 20. While accepting the USG expression
of admiration for the concept, Akil was disappointed by the
USG objections to the text (recommend delinking the tanker
traffic and bypass pipeline issues; oppose quantification of
tanker transit costs; support that bypass routes be based on
commercial feasibility; Russians and others must be engaged).
As author of the concept and noting the dire problem of
congestion in the Turkish Straits, Akil expressed frustration
at the fundamental USG objections to the text. He noted that
he had taken on board all the word suggestions proposed by
the USG earlier in the year. Akil described his proposed
public-private partnership as a transparent approach to bring
all parties together on a vouluntary basis to address the
environmental, security, safety and cultural risks posed by
increasing traffic in the Turkish Straits. He stressed the
importance of improving the safety of shipping in the straits
before a major accident happens, with unforseeable
consequences. Akil noted that the approach was modeled after
the Voluntary Principles for Extractive Industries and Human
Rights, championed by U.S. and U.K., and, according to Akil,
forced onto the GOT for the Baku-Tbilisi-Ceyhan (BTC)
project. Akil claimed that the Voluntary Principles approach
could address the inherent first mover- free rider dilemma of
getting one company to commit to a bypass project. Finally,
he expressed regret that the USG had not participated in the
July 23 meeting in Istanbul.

Lots of Bosphorus Bypass projects - still no permits
--------------------------------------------- -------

3. (SBU) Emb Officers also delivered ref b demarche on
Thrace bypass pipelines. Akil categorically denied press
reports that the GOT supported any particular route or
project- in particular the Transneft supported route that
"copycats" that of Thrace Development Company (with support
of American Howard Lowe). He said there were now five
applications for conditional permits for routes in Turkey:
the two above for trans-Thrace and three for Samsun-Ceyhan
(one with involvement by U.S. firm Universal Ensco). Akil
noted the negative attention attracted by environmental
NGO's, including WWF, on both terminuses of the proposed
trans-Thrace route. This route goes through a relatively
developed section of Turkey in which a pipeline could be
expensive and disruptive, and the harbor on the south end is
environmentally sensitive as a prime area for diving and
biodiversity, according to Akil. In comparison, the Dep DG
described the advantages of the Samsun-Ceyhan routes from
both environmental and use of existing facilities

4. (SBU) Akil emphasized that the overriding goal of the GOT
was to reduce dangerous shipping in the Turkish Straits. He
asserted that choice of potential routes and projects would
ultimately be made based on commercial feasibility.
According to Akil, the five applications were still under
study at the Ministries of Energy, Foreign Affairs, and
Environment, as well as the PM Office for the main criterion
of environmental acceptability of the route, including
terminuses. He said that prior to awarding conditional
permits, projects would have to in turn satisfy criteria of
health, environment, and safety and through-put commitments.
When questioned further on the latter point, Akil cited the
Odessa-Brody as the counter-example of the importance of
securing a through-put commitment or of obtaining the direct
participation of an oil shipper. He concluded that all five
applications had not yet satisfied the above criteria.

5. (SBU) In a separate conversation with EconOff on August
19, Ministry of Energy Dep U/S Selahattin Cimen also denied
any special approval by the GOT for the Transneft backed
trans-Thrace pipeline. He emphasized that the Ministry and
GOT's policy was to let the market decide the best route and
project, ultimately based on throughput commitments and

6. (SBU) Polcounselor also delivered both demarches to prime
ministry chief foreign policy advisor Davutoglu August 25.
Regarding bypass routes, Davutoglu acknowledged that the
Russians have been pressing hard for Turkish acceptance of
the Transneft project. He expects discussions to continue
during Putin's Sept. 2-3 state visit, possibly laying the
groundwork for a decision in favor of the Russians, he
implied. However, he went on to echo Akil's points regarding
the environmental sensitivity of the Saros Gulf on Thrace's
Aegean coast and the possible negative impact of a
trans-Thrace pipeline on the surrounding area. Samsun-Ceyhan
might make more sense despite being a longer route, he said,
since the Ceyhan-Iskenderun area has already become a major
hub for transshipment of crude, with attendant
infrastructure. Regarding the voluntary principles, he
deferred comment until he had had an opportunity to study our
non-paper, but doubted whether a conference involving both
companies and littoral states would be the best way to

7. (SBU) Ambassador has scheduled a meeting August 31 with
the Minister of Energy to reinforce demarche messages and
related issues.

ChevronTexaco likes bypasses, but Russians must be engaged
--------------------------------------------- -------------

8. (SBU) In a separate meeting with Ambassador on Aug 23,
ChevronTexaco officials (Eurasia Unit President Guy
Hollingsworth and Turkey Country Manager Ismail Kafescioglu)
expressed support for 1-2 Bosphorus bypass pipelines to
relieve congestion and delays in the Turkish straits. Citing
the company's growing investment in the Caspian region, the
oil shipper noted that it would eventually seek to
participate in bypass projects. When the Ambassador
mentioned the ChevronTexaco paper on safety (previously
shared with Department), the oil officials expressed deepest
concerns about Russian shippers ("rust buckets").
Nevertheless, they insisted that more volume could be safely
shipped through the straits and asserted that the GOT was
deliberately employing delay tactics to increase pressure on

9. (SBU) ChevronTexaco stated that the Voluntary Principles
had merit, but the GOT had made a significant strategic error
in not engaging the Russian companies from the outset. In
their view, involvement of Russian companies and Black Sea
littoral governments was critical for advancing an informal
working group to facilitate bypass development. The oil
officials expressed support for diverse pipelines so that the
Russians or Turks would not be able to exercise preferential
control. They noted that realistically the first project may
have to be one of the cross-Turkey bypass pipelines.
ChevronTexaco lamented what they called the "done deal" of
the reversal of Odessa-Brody, potentially aggravating the
pressure on the Bosphorus.

10. (SBU) ChevronTexaco also briefed Ambassador on plans to
commence seismic exploration on long-inactive licenses in SE
Turkey. They were bullish on potential for oil field
development there. They noted that they were inclined to use
French oil service companies to avoid American/British
visibility given security concerns.

11. (SBU) ACTION REQUEST: Post seeks Department guidance on
whether to encourage GOT to build on the "Voluntary
Principles, while addressing ref a objections, but to move
forward as a truly voluntary and informal working group,
expanded to include Black Sea littoral governments and
Russian companies. The group could focus on enhancing safety
mechanisms in parallel with governments working to facilitate
timely and transparent permitting of bypass pipeline
projects. In addition, Post could encourage GOT to consider
using the September 2-3 President Putin visit as an
opportunity to seek high-level engagement with GOR on Turkish
Straits issues and bypasses- not to favor a particular
project, but to advocate an informal, nonbinding working
group. Getting the diverse parties to work together will not
be easy; even western companies hold extremely competitive
interests and views. (ChevronTexaco was highly critical of
BP and what it termed the British company's vigorous
opposition to expanding the CPC pipeline, in favor of
filling/expanding BTC at all costs.)

© Scoop Media

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