Identifier
Created
Classification
Origin
06ASHGABAT215
2006-02-21 12:59:00
CONFIDENTIAL
Embassy Ashgabat
Cable title:  

NIYAZOV,S 2/17 GAZPROM, UKRAINIAN VISITORS:

Tags:  ENRG EPET PREL RS TX UP 
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INFO RUCNCIS/CIS COLLECTIVE
RUEHBJ/AMEMBASSY BEIJING 0409
RUEHIL/AMEMBASSY ISLAMABAD 1652
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C O N F I D E N T I A L SECTION 01 OF 02 ASHGABAT 000215 

SIPDIS

SIPDIS

STATE FOR SCA/CEN (PERRY),SCA/CEN DAS GASTRIGHT, EUR DAS
BRYZA

E.O. 12958: DECL: 02/21/2016
TAGS: ENRG EPET PREL RS TX UP
SUBJECT: NIYAZOV,S 2/17 GAZPROM, UKRAINIAN VISITORS:
DECISIONS DEFERRED

REF: ASHGABAT 209

Classified By: Ambassador Tracey Ann Jacobson, reasons 1.4 (b) and (d)

SUMMARY
---------------

C O N F I D E N T I A L SECTION 01 OF 02 ASHGABAT 000215

SIPDIS

SIPDIS

STATE FOR SCA/CEN (PERRY),SCA/CEN DAS GASTRIGHT, EUR DAS
BRYZA

E.O. 12958: DECL: 02/21/2016
TAGS: ENRG EPET PREL RS TX UP
SUBJECT: NIYAZOV,S 2/17 GAZPROM, UKRAINIAN VISITORS:
DECISIONS DEFERRED

REF: ASHGABAT 209

Classified By: Ambassador Tracey Ann Jacobson, reasons 1.4 (b) and (d)

SUMMARY
--------------


1. (C) GazProm CEO Miller,s February 17 visit to Ashgabat
came and went without known result; FM Meredov told
Ambassador that Niyazov deferred any new energy-sector
decisions for at least two months. Far less reassuringly,
Ukraine energy officials, talks the same day with GOTX
counterparts and Niyazov produced only harshly-worded public
demands by the latter for Kyiv to pay its past gas debts.
The Ukrainian Embassy DCM calls GOTX/Kyiv relations now "the
worst in the last five or six years." He admits the GoU,s
debt, but says his Embassy is convinced Niyazov is just using
it as a pretext for discontinuing gas sales to Ukraine, and
that the ultimate disposition of Turkmen gas for the next few
years will be determined not in Ashgabat but by Ukraine,s
election and Moscow,s further machinations thereafter. END
SUMMARY.


2. (C) Background: FM Meredov called Ambassador at 11 pm
Friday, February 17 to inform her that President Niyazov had
taken her brief message (delivered during the opening
ceremony of the new Textile Ministry on Friday morning
immediately prior to Niyazov,s meeting with GazProm CEO
Miller; Reftel) on board. Meredov had also briefed Niyazov
on the fuller version of the talking points Ambassador gave
him after buttonholing Niyazov. As a result, said Meredov,
Niyazov did not sign any new agreements with the Gazprom
delegation on either joint ventures or gas supply
volumes/prices beyond the current 2006 agreement for 30 bcm
at $65/tcm. Instead, Niyazov told Miller the GOTX would
study its proposals for another two months. Press and other
sources have indicated that Niyazov undertook to settle
future supplies and volumes "in the second half of the year"
or "after September." The GOTX statement after these
meetings referred anodynely to their content. From the
Russian side, Miller and others were quoted as saying there

are no issues concerning either the volume or the price of
Turkmen gas sales to Russia. The GOTX statement was silent
on that subject.


3. (SBU) Following the meeting with Miller, Niyazov and his
officials met likewise with the Ukrainian delegation headed
by Minister Plachkov and Havtogaz Chief Ivchenko. In
howling contrast to the conventional tone of the
Gazprom-visit communiqu, the MFA summary of that meeting
attacked the Ukrainian participants for their "deeply
unconstructive" approach. Namely: the GoU delegation
purportedly not only came unprepared to settle what the GOTX
described as its $159 million in overdue debt for past gas
sales, but denied the debt,s existence. Niyazov himself was
quoted as saying that the Ukrainians, attitude was such as
to preclude negotiations for future gas-sale arrangements.
Media report that Yuschenko subsequently phoned Niyazov,
evinced surprise at the reported debts, and promised to look
into the matter.


4. (C) Ukrainian Ambassador told Ambassador Saturday the
GoU side had been ready to hear from Niyazov that
Turkmenistan simply was powerless to supply gas because of
Russia,s refusal to let it be transshipped. What galled
them was Niyazov,s instead harping on the issue of
Ukraine,s debt as justification for not even admitting that
the gas remains contractually due for delivery to Ukraine.
In fact, the supposed debt is being paid off in accord with
the agreed-upon schedule, according to the Ukrainian.


5. (C) We subsequently met with the Ukrainian Embassy DCM
(protect),who offered extra details. He echoed his chief,s
account of Niyazov and his GOTX underlings having from the
meeting,s start launched into sustained attacks over the
unpaid debt -- self-evidently having no wish to discuss or
resolve the issue. Unlike his boss, the Ukrainian DCM did
not assert that the GoU is current on its debt payments.
Rather (as in our most recent meeting two weeks ago),he
admitted that the GoU remained dozens of millions of dollars

ASHGABAT 00000215 002 OF 002


in debt, even after a large payment this January. He
repeated to us his opinion that Yushchenko has been lied-to
on this and other issues by certain of his energy advisors,
first and foremost Ivanchenko, whom Plachkov hates but is
impotent to fire due to his central role in financing
Yushchenko,s election campaigns.


6. (C) That said, it was also a fact (the DCM proceeded to
claim) that of the $159 million in GoU debt, two-thirds is in
the form of goods and services, used as payment under the
barter element of the existing bilateral gas-delivery
arrangement, which either are en route or have actually
already arrived at Turkmenistan,s borders - but not been
accepted for delivery. The GOTX is willfully stalling on
doing so, and its motive is not to squeeze more money but
"purely" to solidify its excuse for discontinuing future gas
contracts or shipments to Ukraine, opined the DCM. In
regard to hard-currency payments, there is no current debt
due at all, according to the Ukrainian.


7. (U) Meanwhile, gas does continue to reach Ukraine, which
for now is apparently not even being billed for it. But
since, on the books, no Turkmen gas is being officially sold,
the GoU may fear at least one of two scenarios, both bad: (i)
even if Ashghabat finally "agrees" to sell Ukraine,s full
agreed 2006 volume of 40 bcm, it will all be considered as
having been shipped in the second half of the year, at
$60/tcm vs. the $50 that by agreement was to have been
charged for first-half-2006 sales; and/or (ii) Gazprom in
turn may claim that all gas delivered to Ukraine since
January 1 has been Gazprom,s own, Russian product, hence
costing in excess of $200/tcm.


8. (C) In practice, these pipeline and price machinations
are mere secondary, background factors, the DCM believed.
They will be left to hang fire pending Ukraine,s election
results. Thereafter, Moscow can be expected to re-calibrate
and escalate its energy-supply pressures in accordance with
the results. Should Akhmetov, Yanukovych et al win power,
Moscow may proceed to offer Ukraine an especially naked
choice: cheap power tariffs in return for large-scale
rapprochement. In any case, for now the bottom line is that
events in Ashgabat may be close to irrelevant to determining
where Turkmenistan,s gas will ultimately be sold, he
thought.


9. (C) The extreme harshness of Niyazov,s and the GOTX,s
public attacks on Ukraine,s debt and visiting delegation was
not unprecedented, but bilateral relations are certainly now
"the worst in at least the last five or six years", our
interlocutor thought. He said his ambassador had convened
all his Embassy personnel immediately after the GoU
delegation,s visit to warn them that the bilateral
atmosphere has become hostile, and to brace for
manifestations of GOTX displeasure, if not open harassment.


10. (C) COMMENT. Niyazov may or may not have been on the
verge of feeling forced to commit himself to a longer-term
agreement with the Russians before these twin visits. In any
case, the TCP apparently can now at a minimum count on at
least a two-month reprieve. But the official treatment of
the Ukrainians bodes ill for the ultimate outcome. To fend
off Russian pressure, Niyazov clearly will need something
more concrete than expressions of Western interest in TCP.
JACOBSON