SECRETARY OF ENERGY SAMUEL W. BODMAN'S MEETING

C O N F I D E N T I A L SECTION 01 OF 04 ASHGABAT 001256

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E.O. 12958: DECL: 11/21/2017
TAGS: PGOV PREL EPET EINV AF AJ IR KZ RS TX
SUBJECT: SECRETARY OF ENERGY SAMUEL W. BODMAN'S MEETING
WITH TURKMENISTAN'S PRESIDENT BERDIMUHAMEDOV (11/15/07)

Classified By: CHARGE RICHARD E. HOAGLAND FOR REASONS 1.4 (B),(D)


1. (U) U.S. PARTICIPANTS:

Secretary of Energy Samuel W. Bodman

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Senior Adviser Molly Williamson
Assistant Secretary Karen Harbert
Public Affairs Director Andrew Beck
Charge d,affaires Richard Hoagland

TURKMENISTAN PARTICIPANTS:

President Gurbanguly Berdimuhamedov
Deputy Prime Minister/Foreign Minister Rashit Meredov
Deputy Prime Minister for Oil and Gas Tachberdy Tagiyev


2. (C) SUMMARY: Secretary Bodman encouraged President
Berdimuhamedov to consider what is necessary to sell
Turkmenistan,s natural gas to the West and to gain the
benefits of participating in full-stream infrastructure
profits. He said he would encourage U.S. energy majors to
cooperate with Turkmenistan. Berdimuhamedov reiterated
Turkmenistan, by law, sells its gas at its border, but said
he would consider the Secretary,s views. While saying he
supports "Caspian delimitation for specific projects," he
added firmly after a whispered consultation with Foreign
Minister Meredov, "Any unified work between Turkmenistan and
Azerbaijan is not on the agenda." Without elaborating,
Berdimuhamedov noted he has told Russia and China
Turkmenistan will start selling its gas "at the world market
price and according to international standards."
Berdimuhamedov emphasized Turkmenistan,s desire to develop
its petrochemical industry and sell more refined products on
the world market. END SUMMARY.


3. (C) During a one-hour meeting on November 15, Secretary
Bodman briefed President Berdimuhamedov on his just-concluded
breakfast with U.S. businessmen. He said they had made a lot
of suggestions but, by and large, are pleased with their
prospects. The President responded he might not know all the
details but is pleased with recent developments. When he was
in New York in September, he met with many business people
and understood more clearly than ever that Turkmenistan needs
high-quality business partners. He added he knows
Turkmenistan needs improved legislation to create the
conditions to attract foreign investment. The President
speculated the Secretary had heard complaints about visas and
the difficulty of securing office space. The Secretary
resoundingly replied, "Yes!" The President laughed and said,
"We,ve heard the problems and are working on them."


4. (SBU) Berdimuhamedov listed Turkmenistan,s priorities:
upgrade and enlarge the Saydi Refinery at Turkmenabat, begin
to produce liquefied natural gas (LNG),stop wasting the six
million cubic meters of natural gas currently being flared
off, and develop the petrocheical industry for greater
production and sales of refined hydrocarbon products. He
said, "We have to use our resources properly."

SELLING GAS TO THE WEST


5. (C) Secretary Bodman said he was concerned how
Turkmenistan would sell its natural gas abroad, noting that
nearly all currently goes north to Russia and that within
several years there will be sales east to China. The
Secretary said, "I encourage you to look at a Trans-Caspian

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Pipeline to sell your gas to the West. Although this is

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sensitive vis--vis Russia, we believe it is in your best
interest to move in that direction to diversify your
customers and income."


6. (C) The Secretary suggested to Berdimuhamedov the
importance of working with Azerbaijan and Kazakhstan. "The
world sees you as an inseparable group of countries that can
work together." He noted Kazakhstan,s President Nazarbayev
is "very elegant" in dealing with Moscow, and might be a
model Turkmenistan could consider.


7. (C) Berdimuhamedov thanked the Secretary for his words.
He clarified it is incorrect to believe Turkmenistan is under
Russian political control simply because Turkmenistan
currently sells the vast majority of its gas to Russia.
That,s an inevitable leftover from the Soviet Union when all
pipelines went northward. "We will always be a reliable
partner for Russia, but our door is open. We understand the
value of diversification. We want more partners. But you
(the United States) have been sleeping for 16 years. Our
door is open, but you have to come through it. We want
high-quality companies from the United States and Europe as
partners, not those that come simply to fill their pockets."
The President specifically named as positive examples Shell,
ConocoPhillips, Chevron, and ExxonMobil. He added, "Mobil
was here once before but ran away., We have learned from
this experience we have to be careful choosing our partners."


8. (C) Berdimuhamedov added his standard points and
reinforced his previous comments:

-- Investment opportunities off-shore in the Caspian are wide
open.

-- For export, we sell our gas at the border -- that,s our
law.

-- The United States was sleeping earlier this year, and so
we agreed on the Prikaspiskyy Pipeline, but Russia didn,t
force us to do so; it was simply in our interest.

-- We have common political understandings with Azerbaijan
and Kazakhstan, but each has its own way of development --
every nation should profit in its own way.

-- If you (the United States) would start speaking seriously
with Azerbaijan about a Trans-Caspian Pipeline, that would be
helpful.

IRAN, AFGHANISTAN


9. (SBU) Explaining relations with its southern neighbors,
Berdimuhamedov said Turkmenistan sells gas to Iran at
"friendly rates," mainly because of the large number of
"Turkmen brothers" living in northern Iran. "Our interest is
economic, not political. We are neutral and do not interfere
in the internal affairs of other countries."


10. (C) Noting the large number of ethnic Turkmen in
Afghanistan, Berdimuhamedov characterized Afghanistan as a
more difficult neighbor than Iran. Without elaborating, he
said, "Afghanistan needs to change its mentality." He also
lamented the danger of Afghanistan,s narco-business. He
commented Afghanistan,s President Karzai has pressed him to
move forward on the Trans-Afghanistan Pipeline so that
Afghanistan could earn up to $300 million per year in transit
fees. Berdimuhamedov said he told Karzai, "Get you country

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under control first, then we can talk about the pipeline."

"WE SELL OUR GAS AT THE BORDER"


11. (SBU) Secretary Bodman told Berdimuhamedov, "I don,t
manage our major energy companies, but they pay attention to
what I think. I will encourage them to make available to
Turkmenistan what they are uniquely qualified to offer." He
noted they offer high-class training in conjunction with
technology, and can help Turkmenistan benefit "all the way
along the value chain," not just from selling gas at the
border.


12. (SBU) Berdimuhamedov concurred that U.S. companies
represent highest quality. He recounted that when he was in
Brussels November 5-7, the Europeans had asked, "What help do
you need?" Laughing but showing his irritation,
Berdimuhamedov said, "We don,t need help! We,re not a weak
country begging. We,re a country that cooperates so that
our partners become our long-term friends. But we sell our
gas at our border; it,s up to you to get it out." He added,
"Turkmenistan is eager to develop its petrochemical industry
to be able to sell more finished products on the world
market."


13. (C) The Secretary noted, "If you sell your gas at the
border, you can,t participate in the profit after that."
Berdimuhamedov said firmly, "It,s our law!" The secretary
suggested Turkmenistan might consider changing that law.
There is a great deal of precedent for the owner of
resources, like Turkmenistan, to claim part ownership of the
full-stream infrastructure to add to the profit. "But it,s
up to you to decide."


14. (C) Berdimuhamedov replied, "We will consider your
ideas. We do pay attention to what you say." He then noted
Turkmenistan has been selling its gas at "old pricing."
However, starting in 2008 with Russia and 2009 with China,
"We have informed them we will now sell only at the world
market price and according to international standards."

CASPIAN DELIMITATION WITH AZERBAIJAN


15. (C) Secretary Bodman noted Azerbaijan would welcome more
natural gas to sell onward to the West, and an agreement for
trans-Caspian transport would require only two countries.
Berdimuhamedov said, "We support bilateral delimitation for
specific projects. But, frankly, we,re more interested in
selling refined products, like LNG." The Secretary raised
the issue of "share collectors" with Azerbaijan. (NOTE: The
translation of this term may have been faulty. END NOTE.)
At this point, Meredov consulted with the President for
several minutes, after which Berdimuhamedov, looking sour,
said firmly, "Any unified work between Turkmenistan and
Azerbaijan is not on the agenda."


16. (SBU) Secretary Bodman asked how Turkmenistan would sell
LNG abroad. Berdimuhamedov mused it could go by railroad or
by ships through the Don-Volga Canal to the Black Sea.


17. (C) The Secretary concluded, "What you do will be in
your own best interest. We are willing to be helpful -- or
we can stay out of your way, if you think that would be
best." Berdimuhamedov thanked Secretary Bodman for adding to
the success of the Turkmenistan International Oil and Gas
Exhibition by his high-profile visit.


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18. (C) COMMENT: The meeting was both cordial and frank,
and achieved the goal of advancing U.S. views. Although
Berdimuhamedov continues to insist Turkmenistan sells its gas
at its border, we note he said he would consider the
Secretary,s view of the benefit of participating in the

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full-stream value chain. Based on the President,s comments,
he is much more focused on selling gas to the West than via a
so far hypothetical Trans-Afghanistan Pipeline. Although
Berdimuhamedov introduced Meredov and Tagiyev as "my closest
advisers," it is more clear than ever Meredov is the
strategist and Tagiyev the technocrat. Whereas Meredov
intervened several times, including one lengthy consultation
with the President, Tagiyev barely spoke at all. Meredov
also shows much more ease with the President than does
Tagiyev, at least in public. END COMMENT.


19. (U) Secreatry Bodman's party did not have an opportunity
to clear this cable.
HOAGLAND