Identifier
Created
Classification
Origin
07BAKU1030
2007-08-17 13:16:00
CONFIDENTIAL
Embassy Baku
Cable title:  

AZERBAIJAN: DAS BRYZA TALKS ENERGY WITH GOAJ

Tags:  PREL PGOV AJ ENRG 
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VZCZCXRO3134
RR RUEHAG RUEHDBU RUEHROV
DE RUEHKB #1030/01 2291316
ZNY CCCCC ZZH
R 171316Z AUG 07
FM AMEMBASSY BAKU
TO RUEHC/SECSTATE WASHDC 3691
INFO RUCNCIS/CIS COLLECTIVE
RUCNMEM/EU MEMBER STATES
RUEAIIA/CIA WASHINGTON DC
RHMFISS/CDR USEUCOM VAIHINGEN GE
RHEBAAA/DEPT OF ENERGY WASHDC
RUEKDIA/DIA WASHDC
RHEHNSC/NSC WASHDC
C O N F I D E N T I A L SECTION 01 OF 02 BAKU 001030 

SIPDIS

SIPDIS

E.O. 12958: DECL: 08/14/2017
TAGS: PREL PGOV AJ ENRG
SUBJECT: AZERBAIJAN: DAS BRYZA TALKS ENERGY WITH GOAJ
MINISTERS


Classified By: Ambassador Anne E. Derse, Reasons 1.4 (b,d)

C O N F I D E N T I A L SECTION 01 OF 02 BAKU 001030

SIPDIS

SIPDIS

E.O. 12958: DECL: 08/14/2017
TAGS: PREL PGOV AJ ENRG
SUBJECT: AZERBAIJAN: DAS BRYZA TALKS ENERGY WITH GOAJ
MINISTERS


Classified By: Ambassador Anne E. Derse, Reasons 1.4 (b,d)


1. (C) SUMMARY: In DAS Bryza's discussions with the Foreign
Minister, Energy and Industries Minister and Minister of
Economic Development, all three agreed that USG and GOAJ
strategic outlook on regional energy issues were in sync.
Moving forward, the USG and GOAJ should focus on bringing
Turkmen offshore gas westwards, on strengthening the energy
transport links between the GOAJ and Kazakhstan, and most
importantly, on resolving differences among (on the one side)
Turkey, Greece and Italy and (on the other side) Azerbaijan
concerning gas transit through Turkey. In subsequent
discussions in Baku August 15-16, EEB A/S Sullivan received
further detail on these and other energy issues (septel).
END SUMMARY.

FOREIGN MINISTER
--------------


2. (C) Like President Aliyev and SOCAR VP Nassirov, FM
Mammadyarov expressed displeasure at the recent
Turkish-Greece-Italy TGI signing, in that it omitted prior
consultation with or even explicit mention of Azerbaijan.
Bryza agreed that closer coordination among those three
countries and Azerbaijan was called for. In this regard,
Mammadyarov and Bryza agreed that an EU-sponsored conference
or summit in the fall at the Heads of State level would show
the collective countries' commitment to the Southern Corridor
Project. Mammadyarov and Bryza said that the EU role should
be prominent in organizing such a conference, with the USG
lending support as needed. Bryza and Mammadyarov also
discussed the possibility of an IEA-sponsored conference in
October or November. They agreed that the TGI project should
be a key focus, and not be crowded out by Nabucco. The
message to European consumers at any regional forum would be
clear and consistent: Azerbaijan has enough gas both for TGI
and for the start of Nabucco Bryza also said there would be
energy meetings in Vilnius on October 11, with Mammadyarov
saying that the GOAJ would attend.


3. (C) Mammadyarov said there would be energy-related MOUs
signed during the President's August 6-8 trip to Kazakhstan.
As for Turkmenistan, Bryza said that he had had a good visit

to Ashgabat, and good talks with Petronas and the GOTX, and
that the GOTX head and understood his presentation on the
benefits of transporting at least some GOTX gas westwards.
Turkmen gas was essential for the Nabucco project, and GOTX
should consider becoming a partner in this project.
Mammadyarov said that "once TGI and Nabucco were signed,
Turkmenistan would join in."


4. (C) Mammadyarov said that he was concerned about the
Iranian-GOT energy agreement. The USG should press upon
Turkey that it should be "part of the team," and "not another
Gazprom." GOAJ confidence in Turkey was shaken both by this
announcement and by the Southstream one. Turkey's fifteen
percent netback proposal, as showcased in the TGI agreement,
would be unacceptable for the GOAJ, and Azerbaijan would not
abide the GOT re-selling GOAJ gas. In response to
Mammadyarov's question about Iraqi gas, Bryza said that it
was an option once calm was restored and a hydrocarbon law
was passed.


5. (C) Bryza said high-level USG officials would be
increasing their engagement in regional energy issues, to
include Undersecretary for Economic, Energy and Agricultural
Affairs Reuben Jeffery and Energy Secretary Bodman, the
latter of whom would be attending the TGI inaugural ceremony.

ECONOMIC DEVELOPMENT MINISTER
-------------- --------------


6. (C) Babayev categorized his recent trip to Greece as
successful. The Greeks were well prepared but had
misconceptions about Gazprom,s reliability and the shortage
of Azerbaijan,s gas supply. Describing Gazprom,s history
of price hikes and price gouging helped Babayev dispel
Gazprom myths. He reassured the Greeks that Azerbaijan,s
production potential was sufficient to meet Greek demands,
and that Azerbaijan can meet its own and Georgia's needs and
still have surplus gas to export to Europe. Babayev said the
Greeks were surprised but did not object to exploring another
alternative. Based on the bilateral GOAJ-Greek Energy MOU
that President Aliyev signed August 2, Babayev said that
theoretically Greece could receive a "symbolic" supply of

BAKU 00001030 002 OF 002


Azerbaijani gas by the end of August. However, Babayev
explained that he is concerned about the "TGI"
intergovernmental agreement among Turkey, Italy and Greece
about gas distribution, the details of which were still
unknown to the GOAJ. Bryza told Babayev that his visit to
Greece was important and that to move forward, Azerbaijan and
Turkey need to agree on prices and quotas.


7. (C) Babayev outlined several concerns about Turkey,
particularly its desire to charge a 15 percent transit fee,
which Babayev called "nonsense" - "Azerbaijan is not looking
to replace Gazprom with a new dictator." Turkey,s transit
fees should be concrete tariffs for services so that every
country knows the exact price of gas. If Turkey is to become
a reliable long-term partner, transparency during the
negotiations is vital. Babayev asked Bryza for USG support
to push for clear and transparent negotiations with a fair
formula that would be beneficial to all, so as to encourage
Central Asian countries to ship their energy west, vice
through Russia. Babayev noted that Foreign Minister
Mammadyarov had offered to host a working group conference to
clarify positions on Azerbaijani gas.

ENERGY MINISTER
--------------


8. (C) In an August 2 meeting, Energy Minister Natiq Aliyev
and DAS Bryza discussed how to best forge new energy links
with Turkmenistan. Aliyev said Azerbaijan could be active,
but the Turkmen need to make the first step ) "we need a
sign that they want to talk." Aliyev said the Europeans,
with the support of the United States, are best poised to
help the Turkmen broker an agreement to move gas westward
through Azerbaijan and on to Europe.


9. (C) "The Turkmen must coordinate with Russia. They have
60-70 bcm of gas and if they spoil their relations, they will
not have other routes to export this gas. They are afraid of
the Russians and therefore their politics will be flexible,"
Aliyev noted. Aliyev commented that he will be traveling
with SOCAR Vice President Elshad Nassirov to Ankara by the
end of the month (following the creation of a new government
in Turkey) to negotiate a gas transit deal. He had spoken
with Turkish Energy Minister Guler on August 1 and agreed on
the need to sign a protocol on gas transit conditions during
the visit. Appearing unaware of SOCAR's new concerns over
the Turkey-Greece-Italy Interconnector agreement, he said
that President Aliyev had in principle agreed to the proposal
whereby 15 percent of the exported gas would remain in
Turkey.


10. (U) This cable has not been cleared by DAS Bryza
DERSE