Identifier | Created | Classification | Origin |
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06ASHGABAT884 | 2006-08-18 10:51:00 | CONFIDENTIAL | Embassy Ashgabat |
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C O N F I D E N T I A L SECTION 01 OF 04 ASHGABAT 000884 |
1. (C) During an August 14 two-hour meeting with SCA Principal Deputy Assistant Secretary (PDAS) Steven Mann, Turkmenistan's President Niyazov expressed interest in multiple gas pipelines but failed to endorse the practical steps involved. Niyazov supported a new trans)Caspian line, but stated that a (wildly unrealistic) delimitation agreement with Azerbaijan would be a prerequisite. His August 15 phone call to Russian President Putin (after Niyazov told Mann that they had not spoken in over three months), is further indication that the goal of his talk of pipeline diversification remains obtaining higher gas prices from Gazprom. Mann had not seen Niyazov in five years and characterized him as a "significantly diminished man." End Summary. Russians Fanning Conflict in FSU; Azeris are their Cat's Paw -------------------------- -------------------------- 2. (SBU) PDAS Mann met with President Niyazov for two hours on August 14. Deputy Chairman of Oil and Gas Gurbanmuradov Atayev and Foreign Minister Rashit Meredov also attended. 3. (C) Noting Mann's portfolio following his tour as U.S. Ambassador to Turkmenistan, Niyazov provided his own analysis of the conflict in Nagorno-Karabagh, setting the scene for his leitmotif for the meeting: the Russians are fanning conflict in the Former Soviet Union and the Azeris are their willing foot soldiers. Just as permanent unrest in Nagorno-Karabagh was in Russian interests, so was lack of delimitation of the Caspian Sea. Multiple Pipelines Key to Turkmenistan's Sovereignty -------------------------- -------------------------- 4. (C) Saying he had come to Ashgabat to "measure the temperature" of our bilateral relationship, especially with regard to new gas pipeline projects, including construction of a Trans-Caspian Pipeline (TCP), Mann noted that the time was ripe for exploring a TCP given the July opening of the Baku-Tbilisi-Ceyhan and Shah-Deniz pipelines. The demand for natural gas in Europe was increasing and, even with the Shah-Deniz pipeline, there was a profitable market for more: "Now is the time for the second phase of the development of the Caspian basin energy reserves," Mann told Niyazov "and that could include a Trans-Caspian Pipeline." U.S. support for a TCP remained as firm as ever, but Turkmenistan must do its part. 6. (C) Peevishly waving a draft of the former failed TCP Agreement from 2000, Niyazov claimed, "We had an agreement years ago, but your negotiator insulted me with his offer of $18 per thousand cubic meters (tcm), less than we already were getting from Gazprom." Mann contradicted that, saying that Niyazov had been offered $53/tcm, and that at a time when oil was $18/barrel. "If I had been offered that much I would have accepted," Niyazov claimed. (Comment: Niyazov is dissembling, again, about why the 2000 deal died. All parties had agreed to the terms up until the final signing when Niyazov asked for $500m in "pre-financing," at which point western investors -- including Shell Oil, GE and Bechtel -- walked away from the deal. We note as well that the $18 figure may reflect lower netback in the CAPEX payback period ) a concept surely alien to Turkmenbashi. End Comment.) 7. (C) Mann told Niyazov that the USG could not order U.S. companies to invest in Turkmenistan's gas, and that, given their prior experience with Turkmenistan (i.e., the 2000 deal), the president needed to send a clear signal that Turkmenistan could be a reliable business partner. The private sector considered Turkmenistan unreliable and no first-tier companies were showing any interest. Niyazov balked at this as well, saying "what are you talking about, we've never cheated anyone; we always deliver what we say we will." Niyazov Requests U.S. Help with Caspian Delimitation ASHGABAT 00000884 002 OF 004 -------------------------- -------------------------- 8. (C) In response to Mann's observation, Niyazov agreed that delimitation was not a prerequisite for building a TCP, but then he asked for Mann's help in getting the Azeris to agree to give Turkmenistan the contested Serdar/Kapaz as well as the Azeri and Chirag fields. Referring to a list of alleged prior historic agreements, Niyazov insisted he would not compromise on Turkmenistan's ownership of these fields. He also rejected Mann's comment that determination of delimitation required agreement on methodologies and that Niyazov was using a land-based methodology in contrast to a widely-accepted maritime methodology. Mann agreed to raise Turkmenistan's position with the Government of Azerbaijan, but told Niyazov to hold his anger if Baku failed to agree. When Niyazov noted that even were Azerbaijan to agree to a delimitation, Iran and Russia also would have to brought into the loop on building a TCP, Mann asked, "Why? Did the Russians ask the Black Sea states' permission when they built the Blue Stream pipeline to Turkey?" Full of Gas -------------------------- 9. (C) According to Niyazov, Turkmenistan is full of gas: -- Seven trillion cubic meters of gas in the Dovletebad Field Reserves. -- Petronas (Malaysia) had found 1 trillion cubic meters of gas in Block 1 in the Caspian Sea, all of which it intended to sell to Turkmenistan, and -- Parker Drilling (U.S., a subcontractor to the Turkish company Calyk Enerji) had found new reserves at Yoloten (near Mary). 10. (C) Mann responded that Turkmenistan could be making significantly more profit if it shifted from its dependence on Gazprom's monopoly and pursued pipeline diversification. He noted Gazprom was selling gas for $249/tcm in Turkey and Azerbaijan was being charged $300/tcm. Iran was offering to sell gas to India for $262/tcm, which India had declined. According to Niyazov, Iran was bluffing; it had no gas supplies in northern Iran and could only re-export Turkmen gas, which explicitly was in violation of the existing Turkmenistan/Iran gas agreement. He added that Turkmenistan currently had an agreement to supply 14 bcm annually to Iran, but that Tehran wanted more. According to Niyazov, Iran wanted to store the gas in Tabriz, and then resell it to Azerbaijan, Georgia and Armenia, which also violated the no re-export terms of the agreement. More on Iran -------------------------- 11. (C) Turning to Iranian Caspian Sea delimitation tactics, both Mann and the president agreed that Iranian demands for 20% were completely unreasonable. Niyazov told Mann that the July 24-25 visit to Turkmenistan of Iranian President Ahmadinejad had been "difficult," and that the two leaders had been unable to make any progress on delimitation. Nonetheless, the president said Turkmenistan would send a delegation to Tehran for the November 31 meeting of Caspian littoral states in Tehran. Gazpromistan -------------------------- 12. (C) According to Mann, Turkmenistan's most profitable and realistic option was to sell gas to Europe; the problem was Gazprom's monopoly. "In Moscow, Turkmenistan is referred to as Gazpromistan; Russia wants to keep you under its thumb," he told the president. Niyazov agreed but said that transit through the Caucasus still was not secure. Mann disagreed, saying that there had been no problems with either the Shah-Deniz or Baku-Tbilisi-Ceyhan pipelines. The problem, he said was the pipelines' capacities were insufficient to satisfy the growing European market. Both agreed that the potential was there, but Niyazov asserted the major stumbling block was political -- lack of Caspian Sea delimitation. ASHGABAT 00000884 003 OF 004 Trans-Turkmenistan-Pipeline? -------------------------- 13. (C) Walking over to a huge gilt-framed pipeline map specially set up in his office for the visit, the president said, "I want to show you a compromise" (Comment: i.e., how to supply a TCP while still meeting Gazprom demands. End Comment.) Pointing to the South-North Central Asia Center Pipeline I,II and IV, Niyazov pointed midway up to a point called "Colyk," and said, "if we build a new East-West Pipeline from Colyk to Turkmenbashy, we can use Dovletabat reserves both to satisfy the Gazprom accounts and to supply a new TCP." (Note: Colyk does not appear on any maps in embassy's possession; we do not know if it refers to a settlement or gas field. It appears to be at/near the supply point identified as "Pustiniya" in the TCP project. End Note.) Mann noted that this was an interesting idea but that attracting foreign investment interest in building the pipeline would involve divulging the volume of the Dovletabat reserves and again emphasized that Turkmenistan needed to send a clear signal it could be a reliable business partner. TAP --- 14. (C) The president showed less interest in a Trans-Afghan pipeline (TAP). Mann agreed this was a less realistic option and stressed that India should take a leadership role and that, although the Indian and Pakistani markets were big, there so far had been no U.S. companies expressing interest. China -------------------------- 15. (C) Noting that Turkmenistan had good relations with China, Niyazov said that China was working with Kazakhstan and Uzbekistan to build a pipeline to western China for Turkmenistan's gas from the Amu Darya gas field. In addition to the pipeline project, he added that Chinese firms already had significant contracts to repair and maintain oil and gas equipment. Mann said that the U.S. policy of supporting pipeline diversity also extended to support for Central Asia - Chinese pipelines. Afghanistan -------------------------- 16. (C) In response to Mann's interest in seeing Turkmenistan increase its electricity exports to Afghanistan, Niyazov noted that Turkmenistan had forgiven a $7 million debt to Afghanistan, and was selling electricity to Afghanistan for half the price (i.e., for one cent per kilowatt hour) that Ashgabat was getting from Iran. In addition, Turkmenistan had signed an agreement to "educate" 30 Afghan students a year. Mann encouraged Niyazov's support for expansion of electricity sales. Mann also asked about the possibility of exporting Turkmenistan's cotton south. According to the president, Turkmenistan sent its cotton to the Persian Gulf by rail through Iran. Uzbekistan, which wanted to avoid transiting its cotton through Turkmenistan, shipped its cotton through Bandar Abbas (Niyazov wasn't clear whether this meant through Afghanistan). Meeting Takes Top Billing in News -------------------------- 17. (C) The meeting received top-of-the-fold coverage in all major government newspapers, and top billing in the evening news broadcast. Official reporting was largely factual, though the Russian black propaganda machine already is seized with the story and spinning away from the TCP to claim the USG supported a TAP and a Chinese Pipeline instead. Press reaction will be reported septel. No Follow-on Meetings, PDAS Mann Holds Press Conference -------------------------- -------------------------- 18. (C) On the way out of the presidential palace, Meredov told Mann they would meet later. This never happened however, as the follow-on meetings with both Meredov and Deputy Chairman for Oil and Gas Atayev first were postponed to later that day, then to the next day (August 15), and then MFA Protocol simply stopped taking embassy calls. ASHGABAT 00000884 004 OF 004 19. (U) Mann scheduled a press conference prior to his departure wherein he discussed pipeline diversification with reporters from Agence France Presse and the Central Asia Times and also emphasized USG support for the development of democracy and civil society in Turkmenistan. Russians Panic -------------------------- 20. At an August 14 reception for the Ashgabat Diplomatic Corps, following Mann's remarks emphasizing the need to begin "Phase Two" of development of the Caspian Sea's resources, a visibly panicked Russian Ambassador Blatov asked Charge, "What does he mean by phase two?" When Charge replied it meant re-examining the feasibility of a Trans-Caspian Pipeline, Blatov warned, "well you know you'll need our approval for that." The August 16 official press headlined with the story that Niyazov had telephoned Russian President Putin on August 15 to discuss "humanitarian, economic and energy issues." At an August 16 reception in honor of a visiting Libyan delegation, Russian DCM Krutko said to Charge, "well, Blatov finally got a meeting with Foreign Minister Meredov, thanks to your Mann visit." Bio Note: President a "Much-Diminished Man" -------------------------- 21. (C) Mann, who had not seen the president for five years, considered him "a much-diminished man." Though Niyazov continued with his stubborn persistence in pursuing irrational ends, he did so in a dull, listless manner, compared to his bullying animation of years past. Niyazov also was not wearing his signature gem-encrusted rings and watch, a possible indication of poor circulation or bloating. He also had a small bandage on his chin, likely from a shaving accident, though the next day's press did not carry a picture of the president from the meeting, substituting an earlier photo instead. Comment -------------------------- 22. (C) Judging from the president's weaker health, his insistence on unachievable objectives, and his immediate contact with Putin, Niyazov's primary goal remains obtaining higher gas prices from Gazprom. He just does not seem to have the fight in him to take on Russia in pursuing a TCP. His wildly unrealistic claims on the major part of Azerbaijan's oil fields are vintage Niyazov and sadly, indicate that as before, whatever desire he may have for a new line is jumbled with large measures of grandiosity and greed. His refusal to let Mann meet with either Meredov, and less so, Atayev, is both an indication of Niyazov's increasingly suspicious, inward-focused world view and a reminder of the extremely tight reins on officials in the Court of Turkmenbashi. End Comment. BRUSH |