Identifier
Created
Classification
Origin
07BAKU1060
2007-08-23 05:45:00
CONFIDENTIAL
Embassy Baku
Cable title:
EEB A/S SULLIVAN'S ENERGY DISCUSSIONS
VZCZCXRO7705 PP RUEHAG RUEHDBU RUEHROV DE RUEHKB #1060/01 2350545 ZNY CCCCC ZZH P 230545Z AUG 07 FM AMEMBASSY BAKU TO RUEHC/SECSTATE WASHDC PRIORITY 3741 INFO RUCNCIS/CIS COLLECTIVE PRIORITY RUCNMEM/EU MEMBER STATES PRIORITY RUEHAK/AMEMBASSY ANKARA PRIORITY 2306 RUEKJCS/SECDEF WASHDC PRIORITY RUEHNO/USMISSION USNATO PRIORITY 0663 RUEHVEN/USMISSION USOSCE PRIORITY 0661 RHMFISS/CDR USEUCOM VAIHINGEN GE PRIORITY
C O N F I D E N T I A L SECTION 01 OF 04 BAKU 001060
SIPDIS
SIPDIS
FOR EUR/CARC
E.O. 12958: DECL: 08/20/2017
TAGS: AJ ENRG EPET KZ PBTS PGOV PREL TU TX
SUBJECT: EEB A/S SULLIVAN'S ENERGY DISCUSSIONS
Classified By: Ambassador Anne E. Derse for reasons 1.4 (b) and (d).
C O N F I D E N T I A L SECTION 01 OF 04 BAKU 001060
SIPDIS
SIPDIS
FOR EUR/CARC
E.O. 12958: DECL: 08/20/2017
TAGS: AJ ENRG EPET KZ PBTS PGOV PREL TU TX
SUBJECT: EEB A/S SULLIVAN'S ENERGY DISCUSSIONS
Classified By: Ambassador Anne E. Derse for reasons 1.4 (b) and (d).
1. (C) SUMMARY: During his August 15-16 visit to Baku, GOAJ
officials echoed President Aliyev's frustration with Turkey
for reaching a deal with Greece and Italy on "Caspian gas;"
Finance Minister Sharifov also complained that Turkish Energy
Company BOTAS was not empowered to negotiate the many
outstanding legal and technical issues, and called for talks
to be escalated from companies to governments. GOAJ
officials welcomed USG outreach to Turkmenistan and affirmed
Azerbaijani interest in working with Turkmenistan to develop
Trans-Caspian corridors. Foreign Minister Mammadyarov urged
the USG to assign a higher profile to its energy diplomacy
and welcomed the USTDA Grant Agreement for a trans-Caspian
feasibility study as the type of initiative currently needed.
A/S Sullivan applauded a regional initiative, proposed by
Kazakhstan, to conclude a trilateral agreement with
Turkmenistan and Azerbaijan on cross-Caspian energy export
options, and agreed to work with Azerbaijan to encourage the
EU to enhance its presence in the Caspian region. BP
officials said that Shah Deniz full field development and new
ACG development would be enough "to fill Nabucco for years"
but cautioned that the lack of a commercial contract for ACG
continues to make Europe
skittish. End Summary.
2. (C) Visiting EEB A/S Sullivan met GOAJ energy
interlocutors on August 15-16 in the lead-up to the signing
ceremony for a TDA grant for a feasibility study on
trans-Caspian oil and natural gas pipelines. A/S Sullivan
briefed GOAJ interlocutors on his recent meetings with
Turkmen government officials, and discussed the current state
of oil and natural gas production in Azerbaijan's offshore
sector, as well as future development of Azerbaijani and
Caspian Sea energy resources. A/S Sullivan encouraged
Azerbaijan President and Foreign Minister to continue
dialogue with Turkmenistan on trans-Caspian gas and Caspian
delimitation issues, and urged Azerbaijan's leadership to
press ahead with Turkey on a natural gas transit agreement.
A/S Sullivan met with President Aliyev, State Oil Company of
Azerbaijan (SOCAR) President Abdullayev, Minister of Finance
Sharifov, Foreign Minister Mammadyarov, and representatives
from BP and the American Chamber of Commerce. Other USG
officials at the meetings included Ambassador Derse, EEB
officer Rob Garverick, USTDA General Counsel James
Wilderotter, DOE analyst Tyler Tiller, and Pol/Econ officers
(notetaker). A/S Sullivan's broader economic discussions are
covered in septels.
SOCAR
--------------
3. (C) A/S Sullivan gave SOCAR President Abdullayev a
readout of his recent talks with Turkmen President
Berdimuhammedov on trans-Caspian energy issues. Commenting
that there was a role for the GOAJ to play in educating the
Turkmen leadership on developing their natural resources,
Sullivan asked Abdullayev what he viewed as the key issues in
the energy relationship. Abdullayev said that "in order to
teach someone something, you must have a relationship with
that person" and commented that there were several
"investment issues" with Ashgabat that needed to be resolved
for the relationship to move forward. Abdullayev emphasized
that the GOAJ continues to be committed to being a transit
state for the transport of Caspian energy resources,
including Turkmen gas, to Europe and that the Turkmen could
learn from the GOAJ's experience; however, the GOTX continues
to refuse Azerbaijani offers of technical assistance.
Abdullayev requested greater USG involvement in convincing
the GOTX that engagement with the GOAJ can benefit
development of their natural resources. A/S Sullivan noted
that he had told Turkmen officials that Azerbaijan,s energy
development experience could be a good model for Turkmenistan.
4. (C) Abdullayev also gave a readout on SOCAR's transit
negotiations with Turkey. Abdullayev said that the GOAJ was
very surprised by the recent TGI MOU and expressed
disappointment that these countries concluded an agreement
about "Azerbaijani gas" without Azerbaijan's involvement.
(President Aliyev expressed similar views to A/S Sullivan and
earlier to EUR DAS Matt Bryza ) see septels.) Abdullayev
said that Turkish interlocutors made clear, as is evident in
the MOU, that the Turkish Government's goal was to become an
energy hub rather than a transit state. Abdullayev stated
BAKU 00001060 002 OF 004
that the two sides had agreed upon a 15 percent netback for
Turkey, but there had been no progress in other areas because
of the GOT position. Abdullayev said that the GOT had taken
the position during the last round of negotiations that it
would not allow the GOAJ to pursue downstream supply
contracts with Greece and Italy until the GOAJ agreed to
Turkey's condition that June 1 serve as the trigger date for
starting the contract on Shah Deniz Phase I gas. (Comment:
This date is significant because the Turks are guaranteed gas
at a reduced rate for one year from the trigger date.)
5. (C) Abdullayev said that the GOAJ had responded to this
threat by telling the GOT that it would not begin
negotiations with GOT on Shah Deniz Phase II gas until the
GOT had conceded the point on downstream supply contracts.
Abdullayev said that they would continue to engage Turkey in
transit negotiations, but that time was getting short with
the original terms of the Shah Deniz supply contract coming
close to expiration. In spite of these problems, Abdullayev
emphasized that the GOAJ was committed to playing a positive
role as a transit state in the transport of Caspian Sea
energy resources to Europe, and to engaging Turkmenistan on
getting a transport agreement in place. Abdullayev (and
other GOAJ interlocutors) urged that the USG continue to
encourage the Turks to resolve this issue, and move ahead on
the transit talks.
BP's Views
--------------
6. (C) During an August 15 dinner hosted by the Ambassador,
senior BP officials provided an update on their own
activities in the Caspian, their thoughts on Europe's view
toward Azerbaijani supply, the prognosis for gas supply to
Georgia this winter, and ongoing Azerbaijan/Turkmenistan
engagement. Attending from BP were BP-Azerbaijan President
Bill Schrader, Gas Marketing Manager Richard Ruddiman,
Director of Communications and External Affairs Clare
Bebbington, and Vice President of Exploration and New
Developments Paul Clyne.
7. (C) Schrader said that the GOAJ's criticism of BP for the
lower-than-expected production figures for this year had
prompted BP to refrain from further production forecasts.
Schrader commented that BP had submitted a strong proposal
for development of ACG Deep Gas to the GOAJ two weeks prior,
including a provision doubling SOCAR's participation in the
project. Schrader said that, as of August 15, BP had not
heard from the GOAJ on the proposal, but interpreted the lack
of the usual GOAJ bluster about the inadequacy of the
proposal as a good sign. In response to a query from
Sullivan on further Shah Deniz production, BP,s Clyne said -
noting the information is not yet public-that BP has
discovered an additional find below the current area covered
by the original Shah Deniz PSA, measuring 20,000 psi and more
than 7,000 feet below the surface. Clyne commented that it
was the deepest ever find in the Caspian and could,
potentially, be a huge field. Although no technology exists
currently that would allow for access to the field, Clyne
said that the new find demonstrated that the Shah Deniz field
was more complicated than originally thought and also
potentially much more productive once technology to access it
became available.
8. (C) Schrader believes that prospective European customers
are concerned by the current lack of commercial access for
ACG Deep Gas. Schrader said that there was enough gas in the
southern Caspian Sea to fill Nabucco for years, but without a
contract and confirmation that these reserves exist and gas
will be produced, doubts will remain. Schrader said that one
contract on ACG Deep Gas would go a long way toward
convincing the Europeans that the gas will be there in a
timely manner.
9. (C) A/S Sullivan also inquired about potential gas supply
problems for Georgia this winter. Ruddiman commented that
Georgia is currently in balance, but will need to continue
imports of Russian gas, a well as imports from Azerbaijan,
this winter. Ruddiman expressed frustration with the fact
that Georgia continues to refuse to sign a long-term supply
contract with another supplier. Ruddiman said that, last
year, Georgia got lucky with the warm weather, but will
continue to face crises of gas supply each year until it
signs a long-term deal.
BAKU 00001060 003 OF 004
10. (C) Turning to Turkmenistan, A/S Sullivan gave a readout
of his meetings with the new President and asked the BP reps
what their impressions were. Schrader said that BP's Andy
Inglis was planning to go to Ashgabat during the week of
August 20 to meet with Turkmen officials. Schrader said that
he felt confident that the Turkmen would come to realize that
Azerbaijan is a viable option for exporting their natural
resources, as Chinese markets are far away and difficult to
access, the GOTX doesn't want to keep losing money from its
gas sales through Russia, and that the current political
climate will prevent the GOTX from selling additional volumes
to Iran.
MOF Sharifov
--------------
11. (C) In a wide-ranging meeting and lunch with Minister of
Finance Sharifov that focused mainly on bilateral economic
cooperation (septel),A/S Sullivan also discussed the status
of transit negotiations with Turkey. Sharifov expressed
frustration with the GOT, stating that the GOT needs to
separate commercial and legal issues in the negotiating
process, or an agreement will continue to be delayed.
Sharifov criticized the Turkish Government's decision to
nominate BOTAS, a commercial entity, as the main negotiator,
arguing that the two countries needed to negotiate a legal
document first before reaching a commercial agreement.
Sharifov said that there are legal issues that BOTAS does not
have the power to decide that need to be settled. Sharifov
said that the GOT is a signatory of theEnergy Charter and the
USG and GOAJ should hold them to those terms in any new
transit agreement. Sharifov expressed frustration that a
large number of technical issues continued to pose obstacles
to a final agreement, including the cost of moving gas across
the Turkish grid, the ratio of exchange of gas, and the
calorific value of Turkish versus Azerbaijan gas. Sharifov
made a strong pitch for USTDA-funded technical assistance to
support legal and technical due diligence in connection with
the transit talks.
FM Mammadyarov
--------------
12. (C) As a prelude to the signing ceremony of the USTDA
grant, A/S Sullivan met with Foreign Minister Mammadyarov and
discussed energy security issues and expressed support for
the GOAJ's continued engagement with Turkmenistan.
Mammadyarov said that Turkmen officials were much more
confident in recent meetings than they had been during
Mammadyarov's initial visit to Ashgabat, interpreting this as
a positive sign that relations can move forward.
Mammadyarov said that he also had good talks with Kazakh
Government officials in a recent trip to Astana regarding
Caspian delimitation. Mammadyarov said that, during his
meetings with Kazakh officials, there had been discussion of
a tri-partite meeting between Kazakhstan, Azerbaijan, and
Turkmenistan that would result in, at least, a signed
statement of intentions to develop a Trans-Caspian Pipeline.
A/S Sullivan expressed interest in this idea and Mammadyarov
said that USG support was welcome, but the Kazakhs had
insisted that they talk to the Turkmen regarding the issue on
their own.
13. (C) Overall, Mammadyarov stressed that he believes U.S.
energy strategy should be more publicly visible, adding that
the USTDA grant signing ceremony was a good example of the
type of visibility that was needed. A/S Sullivan commented
that these were good ideas, and also stressed the need for
high-level European involvement that is so crucial to moving
the project. Mammadyarov replied that energy strategy should
be raised to the level of President of the European
Commission Jose Manuel Barroso so that the entire EU can
become involved in the process. Mammadyarov also stated that
it would be good for the EU to become more involved in the
Turkey transit process and commented that, during
negotiations on the BTC, there wasn't a breakthrough until a
third party became involved at the Istanbul Summit.
Mammadyarov said that the transit talks with Turkey need that
kind of engagement and said that the EU can play this role.
14. (C) A/S Sullivan also asked Mammadyarov about the
current state of Caspian delimitation negotiations.
Mammadyarov said that the last round of negotiations finished
BAKU 00001060 004 OF 004
up in July and that the Turkmen appear to be getting more
interested in resolving the issue and less hostile in
negotiations. Mammadyarov said that the GOAJ again
reiterated its position supporting a median-line approach,
but the Turkmen did not respond.
15. (C) COMMENT: GOAJ interlocutors were enthusiastic and
engaged with Sullivan, whose visit addressed their frequent
requests for tighter coordination with the USG on energy, and
especially, on Turkmenistan. We continue to hear from them
that focused, consistent and high-level USG attention is key
to advancing our Caspian energy, especially gas, objective.
The signing of the USTDA Grant received wide and positive
coverage in the local press, with A/S Sullivan emphasizing
that this was an example of the &next phase8 of Caspian
development, and from the GOAJ more broadly, sending a clear
signal of U.S. interest and support. The USG will want to
follow up on Kazakhstan,s initiative for a trilateral
meeting or agreement with Turkmenistan and Azerbaijan, and
work with Caspian partners to increase the visibility of the
EU in the region.
DERSE
SIPDIS
SIPDIS
FOR EUR/CARC
E.O. 12958: DECL: 08/20/2017
TAGS: AJ ENRG EPET KZ PBTS PGOV PREL TU TX
SUBJECT: EEB A/S SULLIVAN'S ENERGY DISCUSSIONS
Classified By: Ambassador Anne E. Derse for reasons 1.4 (b) and (d).
1. (C) SUMMARY: During his August 15-16 visit to Baku, GOAJ
officials echoed President Aliyev's frustration with Turkey
for reaching a deal with Greece and Italy on "Caspian gas;"
Finance Minister Sharifov also complained that Turkish Energy
Company BOTAS was not empowered to negotiate the many
outstanding legal and technical issues, and called for talks
to be escalated from companies to governments. GOAJ
officials welcomed USG outreach to Turkmenistan and affirmed
Azerbaijani interest in working with Turkmenistan to develop
Trans-Caspian corridors. Foreign Minister Mammadyarov urged
the USG to assign a higher profile to its energy diplomacy
and welcomed the USTDA Grant Agreement for a trans-Caspian
feasibility study as the type of initiative currently needed.
A/S Sullivan applauded a regional initiative, proposed by
Kazakhstan, to conclude a trilateral agreement with
Turkmenistan and Azerbaijan on cross-Caspian energy export
options, and agreed to work with Azerbaijan to encourage the
EU to enhance its presence in the Caspian region. BP
officials said that Shah Deniz full field development and new
ACG development would be enough "to fill Nabucco for years"
but cautioned that the lack of a commercial contract for ACG
continues to make Europe
skittish. End Summary.
2. (C) Visiting EEB A/S Sullivan met GOAJ energy
interlocutors on August 15-16 in the lead-up to the signing
ceremony for a TDA grant for a feasibility study on
trans-Caspian oil and natural gas pipelines. A/S Sullivan
briefed GOAJ interlocutors on his recent meetings with
Turkmen government officials, and discussed the current state
of oil and natural gas production in Azerbaijan's offshore
sector, as well as future development of Azerbaijani and
Caspian Sea energy resources. A/S Sullivan encouraged
Azerbaijan President and Foreign Minister to continue
dialogue with Turkmenistan on trans-Caspian gas and Caspian
delimitation issues, and urged Azerbaijan's leadership to
press ahead with Turkey on a natural gas transit agreement.
A/S Sullivan met with President Aliyev, State Oil Company of
Azerbaijan (SOCAR) President Abdullayev, Minister of Finance
Sharifov, Foreign Minister Mammadyarov, and representatives
from BP and the American Chamber of Commerce. Other USG
officials at the meetings included Ambassador Derse, EEB
officer Rob Garverick, USTDA General Counsel James
Wilderotter, DOE analyst Tyler Tiller, and Pol/Econ officers
(notetaker). A/S Sullivan's broader economic discussions are
covered in septels.
SOCAR
--------------
3. (C) A/S Sullivan gave SOCAR President Abdullayev a
readout of his recent talks with Turkmen President
Berdimuhammedov on trans-Caspian energy issues. Commenting
that there was a role for the GOAJ to play in educating the
Turkmen leadership on developing their natural resources,
Sullivan asked Abdullayev what he viewed as the key issues in
the energy relationship. Abdullayev said that "in order to
teach someone something, you must have a relationship with
that person" and commented that there were several
"investment issues" with Ashgabat that needed to be resolved
for the relationship to move forward. Abdullayev emphasized
that the GOAJ continues to be committed to being a transit
state for the transport of Caspian energy resources,
including Turkmen gas, to Europe and that the Turkmen could
learn from the GOAJ's experience; however, the GOTX continues
to refuse Azerbaijani offers of technical assistance.
Abdullayev requested greater USG involvement in convincing
the GOTX that engagement with the GOAJ can benefit
development of their natural resources. A/S Sullivan noted
that he had told Turkmen officials that Azerbaijan,s energy
development experience could be a good model for Turkmenistan.
4. (C) Abdullayev also gave a readout on SOCAR's transit
negotiations with Turkey. Abdullayev said that the GOAJ was
very surprised by the recent TGI MOU and expressed
disappointment that these countries concluded an agreement
about "Azerbaijani gas" without Azerbaijan's involvement.
(President Aliyev expressed similar views to A/S Sullivan and
earlier to EUR DAS Matt Bryza ) see septels.) Abdullayev
said that Turkish interlocutors made clear, as is evident in
the MOU, that the Turkish Government's goal was to become an
energy hub rather than a transit state. Abdullayev stated
BAKU 00001060 002 OF 004
that the two sides had agreed upon a 15 percent netback for
Turkey, but there had been no progress in other areas because
of the GOT position. Abdullayev said that the GOT had taken
the position during the last round of negotiations that it
would not allow the GOAJ to pursue downstream supply
contracts with Greece and Italy until the GOAJ agreed to
Turkey's condition that June 1 serve as the trigger date for
starting the contract on Shah Deniz Phase I gas. (Comment:
This date is significant because the Turks are guaranteed gas
at a reduced rate for one year from the trigger date.)
5. (C) Abdullayev said that the GOAJ had responded to this
threat by telling the GOT that it would not begin
negotiations with GOT on Shah Deniz Phase II gas until the
GOT had conceded the point on downstream supply contracts.
Abdullayev said that they would continue to engage Turkey in
transit negotiations, but that time was getting short with
the original terms of the Shah Deniz supply contract coming
close to expiration. In spite of these problems, Abdullayev
emphasized that the GOAJ was committed to playing a positive
role as a transit state in the transport of Caspian Sea
energy resources to Europe, and to engaging Turkmenistan on
getting a transport agreement in place. Abdullayev (and
other GOAJ interlocutors) urged that the USG continue to
encourage the Turks to resolve this issue, and move ahead on
the transit talks.
BP's Views
--------------
6. (C) During an August 15 dinner hosted by the Ambassador,
senior BP officials provided an update on their own
activities in the Caspian, their thoughts on Europe's view
toward Azerbaijani supply, the prognosis for gas supply to
Georgia this winter, and ongoing Azerbaijan/Turkmenistan
engagement. Attending from BP were BP-Azerbaijan President
Bill Schrader, Gas Marketing Manager Richard Ruddiman,
Director of Communications and External Affairs Clare
Bebbington, and Vice President of Exploration and New
Developments Paul Clyne.
7. (C) Schrader said that the GOAJ's criticism of BP for the
lower-than-expected production figures for this year had
prompted BP to refrain from further production forecasts.
Schrader commented that BP had submitted a strong proposal
for development of ACG Deep Gas to the GOAJ two weeks prior,
including a provision doubling SOCAR's participation in the
project. Schrader said that, as of August 15, BP had not
heard from the GOAJ on the proposal, but interpreted the lack
of the usual GOAJ bluster about the inadequacy of the
proposal as a good sign. In response to a query from
Sullivan on further Shah Deniz production, BP,s Clyne said -
noting the information is not yet public-that BP has
discovered an additional find below the current area covered
by the original Shah Deniz PSA, measuring 20,000 psi and more
than 7,000 feet below the surface. Clyne commented that it
was the deepest ever find in the Caspian and could,
potentially, be a huge field. Although no technology exists
currently that would allow for access to the field, Clyne
said that the new find demonstrated that the Shah Deniz field
was more complicated than originally thought and also
potentially much more productive once technology to access it
became available.
8. (C) Schrader believes that prospective European customers
are concerned by the current lack of commercial access for
ACG Deep Gas. Schrader said that there was enough gas in the
southern Caspian Sea to fill Nabucco for years, but without a
contract and confirmation that these reserves exist and gas
will be produced, doubts will remain. Schrader said that one
contract on ACG Deep Gas would go a long way toward
convincing the Europeans that the gas will be there in a
timely manner.
9. (C) A/S Sullivan also inquired about potential gas supply
problems for Georgia this winter. Ruddiman commented that
Georgia is currently in balance, but will need to continue
imports of Russian gas, a well as imports from Azerbaijan,
this winter. Ruddiman expressed frustration with the fact
that Georgia continues to refuse to sign a long-term supply
contract with another supplier. Ruddiman said that, last
year, Georgia got lucky with the warm weather, but will
continue to face crises of gas supply each year until it
signs a long-term deal.
BAKU 00001060 003 OF 004
10. (C) Turning to Turkmenistan, A/S Sullivan gave a readout
of his meetings with the new President and asked the BP reps
what their impressions were. Schrader said that BP's Andy
Inglis was planning to go to Ashgabat during the week of
August 20 to meet with Turkmen officials. Schrader said that
he felt confident that the Turkmen would come to realize that
Azerbaijan is a viable option for exporting their natural
resources, as Chinese markets are far away and difficult to
access, the GOTX doesn't want to keep losing money from its
gas sales through Russia, and that the current political
climate will prevent the GOTX from selling additional volumes
to Iran.
MOF Sharifov
--------------
11. (C) In a wide-ranging meeting and lunch with Minister of
Finance Sharifov that focused mainly on bilateral economic
cooperation (septel),A/S Sullivan also discussed the status
of transit negotiations with Turkey. Sharifov expressed
frustration with the GOT, stating that the GOT needs to
separate commercial and legal issues in the negotiating
process, or an agreement will continue to be delayed.
Sharifov criticized the Turkish Government's decision to
nominate BOTAS, a commercial entity, as the main negotiator,
arguing that the two countries needed to negotiate a legal
document first before reaching a commercial agreement.
Sharifov said that there are legal issues that BOTAS does not
have the power to decide that need to be settled. Sharifov
said that the GOT is a signatory of theEnergy Charter and the
USG and GOAJ should hold them to those terms in any new
transit agreement. Sharifov expressed frustration that a
large number of technical issues continued to pose obstacles
to a final agreement, including the cost of moving gas across
the Turkish grid, the ratio of exchange of gas, and the
calorific value of Turkish versus Azerbaijan gas. Sharifov
made a strong pitch for USTDA-funded technical assistance to
support legal and technical due diligence in connection with
the transit talks.
FM Mammadyarov
--------------
12. (C) As a prelude to the signing ceremony of the USTDA
grant, A/S Sullivan met with Foreign Minister Mammadyarov and
discussed energy security issues and expressed support for
the GOAJ's continued engagement with Turkmenistan.
Mammadyarov said that Turkmen officials were much more
confident in recent meetings than they had been during
Mammadyarov's initial visit to Ashgabat, interpreting this as
a positive sign that relations can move forward.
Mammadyarov said that he also had good talks with Kazakh
Government officials in a recent trip to Astana regarding
Caspian delimitation. Mammadyarov said that, during his
meetings with Kazakh officials, there had been discussion of
a tri-partite meeting between Kazakhstan, Azerbaijan, and
Turkmenistan that would result in, at least, a signed
statement of intentions to develop a Trans-Caspian Pipeline.
A/S Sullivan expressed interest in this idea and Mammadyarov
said that USG support was welcome, but the Kazakhs had
insisted that they talk to the Turkmen regarding the issue on
their own.
13. (C) Overall, Mammadyarov stressed that he believes U.S.
energy strategy should be more publicly visible, adding that
the USTDA grant signing ceremony was a good example of the
type of visibility that was needed. A/S Sullivan commented
that these were good ideas, and also stressed the need for
high-level European involvement that is so crucial to moving
the project. Mammadyarov replied that energy strategy should
be raised to the level of President of the European
Commission Jose Manuel Barroso so that the entire EU can
become involved in the process. Mammadyarov also stated that
it would be good for the EU to become more involved in the
Turkey transit process and commented that, during
negotiations on the BTC, there wasn't a breakthrough until a
third party became involved at the Istanbul Summit.
Mammadyarov said that the transit talks with Turkey need that
kind of engagement and said that the EU can play this role.
14. (C) A/S Sullivan also asked Mammadyarov about the
current state of Caspian delimitation negotiations.
Mammadyarov said that the last round of negotiations finished
BAKU 00001060 004 OF 004
up in July and that the Turkmen appear to be getting more
interested in resolving the issue and less hostile in
negotiations. Mammadyarov said that the GOAJ again
reiterated its position supporting a median-line approach,
but the Turkmen did not respond.
15. (C) COMMENT: GOAJ interlocutors were enthusiastic and
engaged with Sullivan, whose visit addressed their frequent
requests for tighter coordination with the USG on energy, and
especially, on Turkmenistan. We continue to hear from them
that focused, consistent and high-level USG attention is key
to advancing our Caspian energy, especially gas, objective.
The signing of the USTDA Grant received wide and positive
coverage in the local press, with A/S Sullivan emphasizing
that this was an example of the &next phase8 of Caspian
development, and from the GOAJ more broadly, sending a clear
signal of U.S. interest and support. The USG will want to
follow up on Kazakhstan,s initiative for a trilateral
meeting or agreement with Turkmenistan and Azerbaijan, and
work with Caspian partners to increase the visibility of the
EU in the region.
DERSE