AZERBAIJAN: OMV CEO OPTIMISTIC ON AZERI GAS FOR

C O N F I D E N T I A L BAKU 000469 SIPDIS SIPDIS BUDAPEST FOR BRYZA E.O. 12958: DECL: 04/19/2017 TAGS: PREL PGOV ENRG AJ PINR TX SUBJECT: AZERBAIJAN: OMV CEO OPTIMISTIC ON AZERI GAS FOR NABUCCO AFTER MEETING PRESIDENT REF: BAKU 463 Classified By: Ambassador Anne E. Derse, Reasons 1.4 (b,d) ¶1. (C) On April 19, OMV CEO Wolfgang Ruttenstorfer provided the Ambassador an upbeat readout of his April 18 meeting with President Aliyev to discuss Nabucco. The meeting was "very constructive, fully constructive -- the President is highly interested in Nabucco -- it was definitely a move forward -the clear picture is that he is prepared to fully support" the project, Ruttenstorfer said. Aliyev indicated interest both in SOCAR's participatig in the project and in supplying gas for it, Rutenstorfer said. Aliyev told Ruttenstorfer that by 2012 Azerbaijan would have three to five bcm to offer for Nabucco's start-up and "would be happy to provide it." Aliyev said Azerbaijan is also interested in providing increasing quantities of gas for Nabucco going forward, depending on the success in developing Azerbaijan's gas resources. Ruttenstorfer said that Aliyev was "understandably cautious," with respect to saying how much gas could ultimately be provided, given his "mixed" experience this year with BP and Shah Deniz, when the GOAJ expected to receive 6 bcm and only received 3 bcm. Aliyev "encouraged us to begin negotiations with SOCAR," which OMV will do, Ruttenstorfer said. He added that he is confident Aliyev will "encourage SOCAR to do everything" possible to make the deal work, within the limits of what Azerbaijan can reliably commit to with respect to gas volumes. "This is not unreasonable," Ruttenstorfer said. The next step is for OMV to prepare the papers to begin negotiations with SOCAR in earnest, which OMV is now doing, Ruttenstorfer said. ¶2. (C) Ruttenstorfer asked Aliyev about Khazakhstan and Turkmenistan and other regional players. Aliyev told him that Khazakhstan and Turkmenistan are "close to Russia and might not be among the pioneers on Nabucco." Rather, they would likely wait until the Transcaspian pipeline was a reality, "and then they'll join" in providing gas to Europe, Aliyev said. Aliyev also told Ruttenstorfer that Iran's participation in the project would "raise many difficulties, not only the nuclear one" and Russia will not support it. Ruttenstorfer commented that in the meeting, which was not formal and included only Aliyev and one aide, Aliyev was "relaxed and open, very much informed and knowledgable." ¶3. (C) COMMENT: Ruttenstorfer was obviously pleased with the results of his meeting with Aliyev. He was clearly convinced of Azerbaijan's desire to supply gas to Europe and Nabucco, apparently satisfied with the promise of 3-5 bcm for start-up, and understanding of the constraints Azerbaijan faces in terms of the many unknowns associated with predicting gas volumes going forward. This is all welcome news in light of a meeting earlier this week between the Ambassador and OMV International Affairs head Gottfried Steiner, who after a meeting with SOCAR was unsure of the GOAJ's desire to provide gas for Nabucco. END COMMENT. DERSE