Cablegate: Turkey's 2008 Energy Sector Priorities

VZCZCXRO2677
RR RUEHAG RUEHAST RUEHBC RUEHDA RUEHDE RUEHDF RUEHFL RUEHIHL RUEHIK
RUEHKUK RUEHKW RUEHLA RUEHLN RUEHLZ RUEHPOD RUEHROV RUEHSR RUEHVK
RUEHYG
DE RUEHAK #0001/01 0010731
ZNR UUUUU ZZH
R 010731Z JAN 08
FM AMEMBASSY ANKARA
TO RUEHC/SECSTATE WASHDC 4810
INFO RUCNCIS/CIS COLLECTIVE
RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUCNRAQ/IRAQ COLLECTIVE
RUEHDA/AMCONSUL ADANA 2566
RUEHIT/AMCONSUL ISTANBUL 3694
RHEHAAA/NSC WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RHEBAAA/DEPT OF ENERGY WASHINGTON DC

UNCLAS SECTION 01 OF 02 ANKARA 000001

SIPDIS

SENSITIVE
SIPDIS

EEB FOR A/S SULLIVAN
EUR FOR DAS BRYZA
SCA FOR MANN
DOE FOR HEGBURG
USTDA FOR DAN STEIN

E.O. 12958: N/A
TAGS: ENRG EPET TU
SUBJECT: TURKEY'S 2008 ENERGY SECTOR PRIORITIES

REF: A. ANKARA 2755
B. BAKU 1483
C. BAKU 1292
D. ISTANBUL 1014

ANKARA 00000001 001.2 OF 002

SENSITIVE BUT UNCLASSIFIED

1. (U) This is an action request. See para 5.

2. (SBU) Summary. Energy Minister Guler told the Ambassador
December 28 that energy issues will continue to play a
central role in the GOT's domestic and foreign policy agendas
for 2008. Guler noted three main priorities: 1) expanded
investment in the energy sector (to include privatization of
electricity distribution and generation assets); 2) reduction
of reliance on Russia through the development of nuclear
power, acceleration of investment in Iraqi gas and expedition
of Turkey's efforts on Nabucco; and 3) implementation of
energy efficient measures. Referring to Russia's recent deal
with Turkmenistan and Kazakhstan for a Tri-Caspian pipeline,
Guler expressed dismay that Russia is "scoring all the
goals." Guler said new ideas and new approaches are needed
to move forward our vision for Caspian energy development.
Lastly, Guler requested we share information on energy
efficiency and Turkey's oil, gas and geothermal potential.
End summary.

Expanding Investment in the Energy Sector
-----------------------------------------

3. (SBU) In a December 28 meeting with the Ambassador, Guler
reaffirmed that privatization of Turkey's electricity assets
is on the agenda for 2008. In addition to restarting a
stalled tender process put on hold by July 2007 parliamentary
elections, Guler said that electricity generation assets
would also be sold. In order to expedite preparation, the
Ministry of Energy and Natural Resources (MENR) will directly
implement the tender rather than transfer the process to the
State Privatization Agency. (Comment: The sale of Turk
Telecom proceeded on similar grounds without the involvement
of the Privatization Agency.) The Ambassador commented that
offering both generation and distribution assets would likely
increase bidder interest.

Reducing Reliance on Russia
-----------------------------

4. (SBU) The centerpiece of Turkey's strategy to reduce
dependence on Russia is to diversify its energy mix away from
natural gas. Currently, electricity is produced by three
main sources: natural gas (46%), hydroelectric dams (25%),
and coal (22%) with the balance from renewables and other
sources. Guler said Turkey will encourage investment in
hydro, wind and geothermal resources. In addition, Turkey is
on a fast-track to develop nuclear power (ref A) and will
offer the first tender in late February. Guler stressed that
our energy diplomacy needs to be reinvigorated by new ideas
and new solutions. He said one idea might be moving up the
timeline to build a gas pipeline from Iraq that would twin
the existing oil pipeline from Kirkuk to Yumurtalik in Turkey
(outlet to the Mediterranean). Ambassador noted accelerated
investment in Iraq's gas sector would be good for the world's
energy balance, as well as for Turkey and Iraq. Ambassador
added that 2008 is the time to make a breakthrough on some
long-standing projects, particularly, the transit of Azeri
gas through Turkey for the Turkey-Greece-Italy
interconnector. Guler said the Italian Energy Minister had
invited him to the quadrilateral talks on this issue set in
begin in January (ref B) and he planned to attend.
Ambassador said if this agreement can be pushed forward, it
would alter facts on the ground that would affect how Russia
markets gas to Europe. Lastly, Guler noted that Turkey would
expedite its commitments to Nabucco and that new appointments
to the BOTAS (State-owned pipeline company) board would be
finalized soon. (Comment: With the new appointments, the
BOTAS board will have a quorum which will likely vote in
favor of the German company RWE's joining the Nabucco
consortium. ref C)

ANKARA 00000001 002.2 OF 002

5. (SBU) Action request: Following up on a request he made
to U.S. Energy Secretary Bodman (ref D), Guler again asked
for an exchange of information on energy efficiency. He said
the GOT would kick off a public campaign on energy efficiency
in 2008 and thought the potential for energy savings could
have as much impact as new investment in the sector. (Note:
DOE will host a Clean Energy Technologies Workshop in
Istanbul January 29-30, which will also include some
expert-level discussions with MENR's energy efficiency
directorate, EIE. Guler also appears interested in policy
level discussions and is soliciting U.S. experience in
putting into place policies to encourage energy efficiency.)
Guler made one additional request for U.S. assistance; he
asked whether we could share any data or satellite
information on Turkey's oil and gas reserves or geothermal
energy potential. He said he would like to use such data to
attract foreign investment. Ambassador said we would take
both requests back to Washington. Post appreciates
Washington's assistance in responding to Guler's requests.
Embassy contact for this issue is economic officer Rebecca
Neff.

Visit Ankara's Classified Web Site at
http://www.state.sgov.gov/p/eur/ankara/

WILSON

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