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Cablegate: President Gul Proposes Gas Pipeline Via Iran and Joint

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DE RUEHAK #2921/01 3411514
ZNR UUUUU ZZH
R 071514Z DEC 07
FM AMEMBASSY ANKARA
TO RUEHC/SECSTATE WASHDC 4590
INFO RUCPDOC/USDOC WASHDC
RHEBAAA/DEPARTMENT OF ENERGY WASHDC
RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUEHUNV/USMISSION UNVIE VIENNA 0172
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RUEHKB/AMEMBASSY BAKU 1547

UNCLAS SECTION 01 OF 02 ANKARA 002921

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

SENSITIVE
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E.O. 12958: N/A
TAGS: ENRG EINV BEXP TU
SUBJECT: PRESIDENT GUL PROPOSES GAS PIPELINE VIA IRAN AND JOINT
EXPLORATION FOR TURKMEN GAS

SENSITIVE BUT UNCLASSIFIED. PLEASE HANDLE ACCORDINGLY.

1. (SBU) SUMMARY: Turkish President Abdullah Gul's December 5-6
visit to Turkmenistan focused on energy and economic relations. Gul
proposed to his Turkmen counterpart to transport Turkmen gas to
market via Turkey, and joint oil and gas exploration in
Turkmenistan. Energy Minister Guler was quoted in press reports as
saying that Turkey proposed a new gas pipeline through Iran. An
advisor to Guler confirmed that Guler had proposed the "more
realistic and doable" Iran route over the Trans-Caspian pipeline
(TCP) while another Energy ministry contact said Turkey supports
both TCP and an Iran pipeline, and said the Turkmen wanted to go
forward with joint exploration. Both contacts emphasized Turkey's
need for more gas in the short (5-7 year) term, when Turkey's supply
insecurities will be highest. End Summary.

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2. (U) Following his trips to Azerbaijan, Georgia and Pakistan,
Turkish President Abdullah Gul paid an official visit to
Turkmenistan on December 5-6. Gul's stated aim was to "rebuild
ties" with the Turkmen Government and increase economic cooperation
between the two countries. "My visit will provide an opportunity to
redefine, revise and strengthen our shared vision for the future, in
the light of past experiences," said Gul, prior to his departure.
This was Turkey's first Presidential visit to Turkmenistan in seven
years. Energy Minister Hilmi Guler, Industry Minister Zafer
Caglayan, Turkish Union of Chambers and Commodity Exchanges (TOBB)
President Rifat Hisarciklioglu and several businessmen joined Gul
for his visit.

3. (U) Gul and Turkmen President Berdymukhamedov signed a joint
declaration and held a press conference, where Gul said both sides
agreed on the immense potential for cooperation in regional and
international issues. President Berybukhamedov referred to both
countries facing terrorism and crime problems on which the two
countries agreed to work together, but gave no details. Following
the presidential meetings, Turkish Industry Minister Caglayan and
Vice Chairman of the Turkmen Council of Ministers Mukhamedov signed
an "Agreement for Establishment of an Inter-Governmental Economic
Commission between Turkey and Turkmenistan."

A Pipeline via Iran
-------------------

4. (U) After meetings with his Turkmen counterparts, Energy Minister
Guler announced that Turkey wanted to revitalize the
Turkey-Turkmenistan gas pipeline project. Guler said President Gul
and President Berdymukhamedov would discuss building a 16BCM
capacity pipeline from Turkmenistan to Turkey via Iran.

5. (SBU) Following Minister Guler's comments on the Iran pipeline
proposal, Musa Gunaydin, an advisor to Energy Minister Guler, told
us that Guler had not actually specified a route through Iran in his
press comments, but did not deny that he raised the Iran route with
the Turkmen. Gunaydin said that Turkey supports both a
Trans-Caspian Pipeline (TCP) and a Turkmenistan- Iran- Turkey
pipeline. There is enough gas supply in Turkmenistan and enough gas
demand in Europe for both projects. However, Gunaydin reiterated
the importance of timing, arguing that Turkey was competing against
Russia and had to act quickly to secure other resources. He thought
the Gul visit was a major step and that progress would come quite
quickly after this stage. "An agreement may be concluded in a few
months," said Gunaydin.

6. (SBU) We received a different reaction from Energy Analyst and
independent advisor to Minister Guler, Faruk Demir, who confirmed
that Guler had proposed the Iran route, although he said this did
not mean Turkey was giving up on TCP. Turkey had supported TCP for
years without seeing any progress, and would be happy to move
forward with it if they saw it as "more realistic and doable." Demir
noted that a major impediment to the Iran route had been the lack of
an agreement between Turkey and Iran on transit issues. "The recent
agreement Turkey and Iran reached, where Iran agreed to Turkey using
Iranian territories for importing Turkmen gas, paved the way for
this project with Turkmenistan," said Demir. Turkey plans to build
a new pipeline to transport the 16BCM of gas that Turkey contracted
with Turkmenistan for in 1999, plus any Turkmen gas that Turkish
companies may develop in the future. The existing gas pipelines
between Turkmenistan, Iran, and Turkey could support a 5BCM initial
flow, according to Demir, but construction of a high-capacity
pipeline makes more sense.

Joint Oil and Gas Exploration Projects

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7. (SBU) Prior to Gul's trip, press reports citing an unnamed Prime
Ministry official reported that Turkey would propose joint oil and
gas exploration projects to the Turkmen side. Musa Gunaydin, an
advisor to Energy Minister Guler, had told us about the GOT's plans
to develop oil and gas fields in Turkmenistan in a meeting on
December 3. Gunaydin expressed high hopes on the Turkmen
Government's position with regard to cooperation with Turkey, and
said the timing was extremely important. Gunaydin asked for the
Embassy's assistance in facilitating access to the U.S. companies
who may be interested in taking part in such projects. Following
Gul's visit, Gunaydin confirmed the Turkish side made the proposal
for joint exploration and development and said the Turkmen wanted to
go forward these projects.

8. (SBU) COMMENT: The proposals for joint exploration and
transportation of Turkmen gas through Iran are consistent with
Turkey's strategy to diversify and expand its energy supply over the
next 5-7 years. Turkey now gets 60% of its natural gas from Russia,
and wants to be dependent on no single country for more than 30% of
its gas. It uses just over 50% of its gas for producing
electricity, and needs to quickly and sharply increase electricity
production to keep up with escalating demand. The GOT is working
hard to build good relations with all of its gas-rich neighbors,
including Iran to meet these requirements. We have heard similar
complaints about the lack of action on the TCP from Guler and other
GOT energy contacts. End Comment.

Wilson

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