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Cablegate: Turkey: Shell Joins Samsun-Ceyhan

VZCZCXRO0722
RR RUEHAG RUEHDBU RUEHDF RUEHIK RUEHLN RUEHLZ RUEHVK RUEHYG
DE RUEHAK #5624 2691438
ZNR UUUUU ZZH
R 261438Z SEP 06
FM AMEMBASSY ANKARA
TO RUEHC/SECSTATE WASHDC 8998
INFO RUCPDOC/USDOC WASHDC
RHEBAAA/DEPT OF ENERGY WASHINGTON DC
RUCNMEM/EU MEMBER STATES COLLECTIVE
RUEHGB/AMEMBASSY BAGHDAD 0760
RUCNCIS/CIS COLLECTIVE
RUEHIT/AMCONSUL ISTANBUL 1357
RUEHDA/AMCONSUL ADANA 1144

UNCLAS ANKARA 005624

SIPDIS

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

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: ENRG EPET EINV TU
SUBJECT: TURKEY: SHELL JOINS SAMSUN-CEYHAN

REF: ANKARA 2510

Sensitive But Unclassified. Please handle accordingly.

1. (SBU) Summary: In a potentially significant development for
Turkey's quest to build the Samsun-Ceyhan project as the first real
"Bosphorus bypass" oil pipeline, Royal Dutch Shell announced
September 26 that it signed a contract with Calik Energy and Italian
ENI for participation in the development of the pipeline project.
Although the commitment was not clearly defined and the project
still faces competition nd hurdles in gaining sufficient oil
throughpt and financing, this is a potentially critical step for
realizing Turkey's long preferred "Bosphorus bypass" project. End
Summary.

2. (U) The statement issued by Shell pointed out the importance of
this by-pass project in reducing tanker traffic through the Straits,
and in establishing a sustainable export corridor for crude oil
going from Russia and the Caspian through the Black Sea to the
Mediterranean. Shell Turkey GM Canan Ediboglu told Reuters the
project partners targeted Kazakh oil as through-put in the pipeline.
Ediboglu noted Shell's partnership with ENI in Kazakhstan's
Kashagan field and the Russian CPC pipeline, which was a key factor
in their decision to participate in Samsun-Ceyhan. The Shell rep
said the plan was to transport Kazakh oil to the Black Sea through
CPC and then to feed it into Samsun-Ceyhan.

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3. (SBU) Turkish Calik Energy and ENI recently announced formation
of a company - the Turkish Anatolian Pipeline Co., TAPCO - to
develop the project, which has been long supported by the Turkish
Government as the preferred route to seek to allay tanker congestion
in the Turkish Straits and to foster development of an energy hub at
Ceyhan. Calik Energy was granted an exclusive six-month license in
May by the GOT to gain oil through-put and financing commitments,
but Calik representatives told us they expected that the GOT would
give them more time to develop the pipeline project (Reftel).
Chevron, TNK-BP, TOTAL (which made a separate application for a
license) and other Russian companies have all been looking at the
project, but have remained uncommitted.

4. (SBU) BOTAS acting DG Saltuk Duzyol told us Shell's
participation was good news for realization of this project, but
noted that the competing Burgos-Alexandropolos project, which has
strong Russian backing, was also far along. He noted, moreover,
that Shell's specific commitment was undefined at this point and
Calik's license would soon potentially expire. Duzyol opined that
Russian through-put guarantees would still be important to make the
project happen, but that Shell's participation could create
momentum. The BOTAS DG said that BOTAS had been approached by the
consortium with proposals for using oil storage at Ceyhan, building
new storage tanks and a new jetty, and supplying gas to pump
stations, but he said that BOTAS was still waiting for a clearer go
ahead from both the government's Council of Ministers and oil
shippers.

Wilson

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