DRAFT TURKMENISTAN-EU MEMORANDUM OF UNDERSTANDING

1. (U) Sensitive but unclassified. Not for public Internet.



2. (SBU) On November 19, the EU-TACIS office in Ashgabat
informally passed to the Embassy a copy of the draft MOU,
dated November 9, 2007, for further cooperation between the
EU/EC and the Government of Turkmenistan. According to
EU/TACIS the Turkmenistan government has until November 30 to
provide any additions or amendments. A Turkmenistan official
is expected attend the technical meeting in Brussels on
November 30 to discuss the findings of the "EU Feasibility
study of a TransCaspian - Black Sea Corridor."



3. (SBU) The text of the MOU follows:

BEGIN TEXT:

MEMORANDUM OF UNDERSTANDING ON CO-OPERATION IN THE FIELD OF
ENERGY BETWEEN THE EUROPEAN UNION AND TURKMENISTAN

Recognising the strategic importance of the energy sector for
the economic and social development of Turkmenistan,

recognising the key role of Turkmenistan as a major
hydrocarbon producer in the Caspian Sea region, and the
mutual interest of both the European Union and Turkmenistan
for enhancing cooperation in the energy sector to increase
the security of energy supplies and the predictability of
energy demands,

having regard to the Communication to the Council and the
European Parliament on an Energy Policy for Europe of 10
January 2007, which sets-out the priorities to be pursued by
an effective external EU Energy Policy,

having regard to the conclusions of the Brussels European
Council meeting of 8-9 March 2007, which underlined, inter
alia, the importance of intensifying the EU relationship in
the field of energy with Central Asian and the Caspian region,

having regard to the EU Strategy for a new partnership with
Central Asia adopted during the European Council of 21-22
June 2007, which notes the common interest in diversifying
export routes, demand and supply structures and energy
sources, as well as the intent of the EU to lend political
support and assistance to Central Asian countries in
developing a new Caspian Sea-Black Sea ) EU energy transport
corridor.

recalling the conclusions of the 2nd Energy Ministerial
Conference in Astana on 30 November 2006 on Enhancing Energy
Co-operation between the EU, the Littoral States of the Black
and Caspian Seas and their neighbouring countries in which
participants agreed to focus their co-operation on the
following objectives:

-- converging of energy markets on the basis of the EU
internal energy market principles taking into account the
particularities of the Partner Countries;
-- enhancing energy security by addressing the issues of
energy exports/imports, supply diversification, energy
transit and energy demand;
-- supporting sustainable energy development, including the
development of energy efficiency, renewable energy sources
and demand side management;
-- attracting investment towards energy projects of common
and regional interest,

recalling that both sides have benefited from co-operation in
the framework of Community assistance under the INOGATE

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Programme,

recognising that enhanced energy co-operation with the
European Union coul address more specifically those areas
not already covered by regional co-operation as well as focus
more clearly on those issues of particular mutual interest.

recognising the importance of their bilateral energy
relations and the necessity to adopt a comprehensive approach
Turkmenistan and the European Union express their readiness
to cooperate on the elaboration of two roadmaps concerning
enhancement of energy security and industrial cooperation
respectively.



1. Road map for enhancing energy security

1.1 The European Union and Turkmenistan will regularly
exchange information on the development of policies that may
have an impact on the production, processing, transportation
and use of all energy resources, with a focus on energy
security.

1.2 The European Union and Turkmenistan will regularly
consult on energy scenarios in order to have a joint
understanding of possible future developments including, in
particular, hydrocarbon reserves assessment, plans to expand
production capacity and the energy transportation system as
well as possible future trends in energy demand within the
European Union.

1.3 In view of mutual interest to diversify energy markets
and supply routes, the European Union and Turkmenistan will
cooperate in implementing attractive, stable, equitable and
transparent conditions, such as institutional, legal, fiscal
and other conditions to facilitate and expand
non-discriminatory investment in the energy sector. The EU
and Turkmenistan will co-operate to give political support
and facilitate the development of energy transportation
infrastructure of common interest in particular along the
Southern Corridor route. As appropriate, this could include
input from International Financing Institutions.



2. Road map for enhancing industrial cooperation

Recognising the common interest in attracting further
investment into the energy sector in Turkmenistan,
Turkmenistan and the European Union intend to:

-- promote cooperation between the European Union and
Turkmenistan, and their respective energy companies through
joint activities with a particular focus on investments in
the upstream sector, energy technology, the acquisition of
technological skills, appropriate training and exchange of
expertise;
-- support co-operation in hydrocarbon exploration for both
on-shore and off-shore and transportation
-- develop and introduce renewable energy sources, such as
solar energy, as well as energy efficient and environmentally
friendly technologies such as gas flaring reduction measures
-- promote the formulation and implementation of energy
efficiency policies as well as exchange of industry best
practices (including possibly in the building sector and in
the area of district heating), in order to reduce energy
wastage and the environmental impact of high energy
consumption.

Final Considerations

The present document is a document that records political

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intent alone and provides for no legal commitment.

Done in XXX on the X day of XXX 200X, in the English and
Turkmen(?) languages.


On behalf On
behalf
of the European Union of the Republic of
Turkmenistan

END TEXT.



4. (SBU) COMMENT: While the development of a unified EU
energy policy emphasizing alternative export pipelines for
Turkmenistan and greater EU engagement on energy issues with
Turkmenistan is consistent with U.S. policy, the discussion
of a Southern Corridor route in section 1.3, which likely is
a reference to a pipeline through Iran, is not. Post has
discussed this issue on occasion with EU-TACIS, whose
director has previously defended such a pipeline as "a good
idea" and who has made very clear that this is one area where
there is a major parting of the minds between the EU and the
United States. END SUMMARY.
HOAGLAND