TURKMENISTAN: FOREIGN MINISTER MEREDOV TELLS

C O N F I D E N T I A L SECTION 01 OF 03 ASHGABAT 000999

SIPDIS

SIPDIS

STATE FOR SCA/CEN, EUR/RUS, EUR/CARC, EEB; PLEASE PASS TO
USTDA DAN STEIN
ENERGY FOR EKIMOFF
COMMERCE FOR HUEPER

E.O. 12958: DECL: 09/20/2017
TAGS: EPET PREL PGOV TX AJ
SUBJECT: TURKMENISTAN: FOREIGN MINISTER MEREDOV TELLS
USTDA NO CONNECTOR PIPELINE WITHOUT DELIMITATION -- AT
LEAST FOR NOW

Classified By: Charge Sylvia Reed Curran for reasons 1.4(B) and (D).


1. (C) SUMMARY: Although Turkmenistan's President
Berdimuhamedov continues to say publicly that the option of a
Trans-Caspian pipeline (TCP) remains on the table, both
Deputy Chairman/Foreign Minister Rashit Meredov and Executive
Director of the State Agency for Management and Use of
Hydrocarbon Resources Bayrammurat Muradov separately told
U.S. Trade and Development Agency (USTDA) Regional Director
Daniel Stein September 17 and 18 that Turkmenistan is
adhering to the policy of Berdimuhamedov's predecessor that
no exploitation of gas can take place until resolution of
Turkmenistan's border dispute with Azerbaijan. Stein was in
Turkmenistan, among other reasons, to see whether the
government would be willing to sanction a USTDA-funded
feasibility study for construction of a connector pipeline
between existing platforms in Turkmenistan's Block 1 and
Azerbaijan's Shah-Deniz or ACG fields. Post strongly
believes that Meredov, at least, is not firmly wedded to this
policy and recommends that Assistant Secretary Boucher
further discuss this issue with Meredov in New York. END
SUMMARY.

CONDUCTING A NON-BINDING FEASIBILITY STUDY OF A CONNECTOR
PIPELINE


2. (C) During September 17-18 meetings with Deputy Chairman
of the Cabinet of Ministers/Foreign Minister Rashit Meredov
and Executive Director of the State Agency for Management and
Use of Hydrocarbon Resources Bayrammurat Muradov, USTDA
Regional Director for European and Eurasian Affairs Daniel
Stein noted that SCA's PDAS Steve Mann had raised the
possibility of pursuing a connector pipeline between
Turkmenistan's offshore blocks to platforms in Azerbaijan's
Shah Deniz or ACG field, which would effectively connect
Turkmenistan's gas to the Shah Deniz or ACG pipeline.


3. (C) Stein stressed that the advantage of this plan,
developed in response to President Berdimuhamedov's call for
concrete proposals, is that it is not about a TCP, with all
the sensitivity attached to that project (in particular, the
Russian and Iranian position that a TCP would require
agreement by all five littoral states). Rather, it would
just connect off-shore platforms. This type of activity
takes place all over the world. Economically, the investment
required for such a connector would also be substantially
less than for a TCP, since the distances would be shorter.
USTDA wants to suggest the possibility of carrying out a
feasibility study of this project, with cooperation from the
Government of Turkmenistan. Stein also added that USTDA had
already discussed the possibility of such a feasibility study
with the Government of Azerbaijan, SOCAR and BP, all of which
supported the concept of a feasibility study, recognizing
that such a study does not commit anybody to moving forward
with such a pipeline.

MURADOV, NOT A DECISION-MAKER, SAYS NO


3. (C) Muradov, with whom Stein first raised this idea
September 17, agreed that the economic concept sounded
attractive. However, he added, while economics plays an
important role, it does not play a decisive role in
Turkmenistan's approach. Stressing that he is not a
decision-maker on this issue, Muradov nonetheless offered up
his personal opinion that, until Turkmenistan is able to
resolve outstanding issues on the basis of solidarity, mutual
respect and mutual understanding, Turkmenistan could not
agree to such a study. Turkmenistan never takes actions in
the Caspian that could be misconstrued. Until his government
resolves delimitation of Turkmenistan's Caspian border with

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Azerbaijan, it does not want to be pulled into any activities
that could be misunderstood. While Turkmenistan wants the
issue to be resolved, the two sides have not yet done so.

MEREDOV SAYS NO, BUT ADDS "WE MUST THINK"


4. (C) A day later, Foreign Minister Meredov (who is a
decision-maker) took a similar although less categorical
position. Thanking Stein for his proposal and acknowledging
the U.S. effort to present a concrete proposal, Meredov said
that Stein's proposal is not a simple issue. The U.S.
proposal for the Livanov field in Block 1 is complex because,
from an international legal perspective, Turkmenistan's
border dispute with Azerbaijan remains unresolved.
Turkmenistan recognizes the need to resolve its border issues
with Azerbaijan and is working on doing so. Turkmenistan's
call for delimitation first does not mean either that it is
being inflexible. Indeed, Turkmenistan is seeking a mutually
beneficial solution. However, he added, "we must resolve
this issue (i.e., delimitation) bilaterally."

MEREDOV ACTIVELY LOOKING FOR NEW DELIMITATION MODELS?


5. (C) Meredov noted the need for more understanding of how
delimitation issues had been resolved elsewhere. Such
knowledge, he said, would be beneficial for Turkmenistan's
efforts to negotiate a solution with Azerbaijan. Stein
agreed on the need to study international experiences and
offered to assist, including by offering Turkmenistan greater
access to international expertise. He also pointed out that
a feasibility study on the joint development of a connector
pipeline from Block 1 to platforms in Azerbaijan could also
help by enhancing understanding among all parties of the
consequences of a pipeline.


6. (C) The Charge expressed optimism about the possibilities
for a delimitation agreement. Indeed, there already had been
delimitation on a bilateral basis between Azerbaijan and
Russia, Russia and Kazakhstan, and Kazakhstan and Azerbaijan.
Delimitation of borders with Iran, however, could prove more
complicated. Meredov repeated that delimitation had become a
complex issue. When negotiations had started, the five
littoral states had agreed to seek delimitation along the
same set of principles. While many of the littoral states
had strayed from that agreement, Turkmenistan had continued
to adhere to the original principles, seeking resolution
through negotiations that, to date, had "not been
ineffective."


7. (C) Speaking very carefully, Meredov acknowledged that
the connector pipeline would not be a TCP. "We need to
think." Turkmenistan's response to the concept of a
connector pipeline is not meant to be an attempt to escape
cooperation, he said. Meredov and Turkmenistan is constantly
thinking of ways to resolve the delimitation issue. "But,
you're talking about joint activity." Meredov added, "We
have some promising things." Stressing that "we are friends,
and should be frank and open," Meredov added that
Turkmenistan highly values U.S. efforts to offer concrete
proposals. "We will continue this activity."


8. (C) COMMENT: Former President Niyazov made the decision
that delimitation must come before any possible commercial
exploitation of the disputed territory, and it is clear that
President Berdimuhamedov, while slowly reversing many of his
predecessor's other policies, has not yet done so on this
particular issue. That said, however, Meredov's tone and
body language, particularly in the latter half of the
discussion, was much more reflective -- almost as if, as he
was making his points, he was simultaneously trying to think

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how he might be able to persuade the President to consider
some changes. And, in fact, Meredov reportedly told UK State
Minister for Energy Malcolm Wick, in town September 19-20 to
discuss energy, that Turkmenistan is looking at up to six
different formulations that would allow it to access the
hydrocarbons in the disputed zone and manage the delimitation
issue. Post strongly recommends that Assistant Secretary
Boucher further discuss this issue of a feasibility study
with Meredov in New York.
CURRAN