Identifier
Created
Classification
Origin
08ASHGABAT1345
2008-10-10 03:27:00
CONFIDENTIAL
Embassy Ashgabat
Cable title:
TURKMENISTAN AND IRAN: FLOATING PRICE GAS DEAL
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C O N F I D E N T I A L ASHGABAT 001345
SIPDIS
STATE FOR SCA/CEN AND NEA/IR,EEB
PLEASE PASS TO USTDA DAN STEIN
USEU FOR SPECIAL ENVOY GRAY
ENERGY FOR EKIMOFF/THOMPSON
COMMERCE FOR HUEPER
E.O. 12958: DECL: 10/09/2018
TAGS: PGOV PINR PREL EPET IR TX
SUBJECT: TURKMENISTAN AND IRAN: FLOATING PRICE GAS DEAL
STILL UNDER NEGOTIATION
Classified By: Charge d'Affaires Sylvia Reed Curran. Reasons 1.4(b) and
(d).
C O N F I D E N T I A L ASHGABAT 001345
SIPDIS
STATE FOR SCA/CEN AND NEA/IR,EEB
PLEASE PASS TO USTDA DAN STEIN
USEU FOR SPECIAL ENVOY GRAY
ENERGY FOR EKIMOFF/THOMPSON
COMMERCE FOR HUEPER
E.O. 12958: DECL: 10/09/2018
TAGS: PGOV PINR PREL EPET IR TX
SUBJECT: TURKMENISTAN AND IRAN: FLOATING PRICE GAS DEAL
STILL UNDER NEGOTIATION
Classified By: Charge d'Affaires Sylvia Reed Curran. Reasons 1.4(b) and
(d).
1. (C) A Turkish diplomat confirmed to us today that
notwithstanding earlier press reports to the contrary, no
deal has been reached whereby Iran would purchase gas from
Turkmenistan according to a floating price formula beginning
next year. The diplomat, Hakan Chengiz (please protect),told
emboff that last spring, following a dispute between the two
countries, Turkmenistan had renegotiated the price from the
existing USD 65 per 1000 CM to USD 140 per 1000 CM. (COMMENT:
The Polish ambassador told us that the Iranian ambassador
said this price is only good until the end of this year. END
COMMENT.) Under the previous framework agreement between the
two countries, Turkmenistan had agreed to sell Iran "up to 14
BCM per year" at USD 65 per 1000 CM, but had overcontracted
its gas export capacity and found itself in a bind. At the
time, Turkmenistan said publicly that Iran had failed to
maintain the gas pipeline on its end and that it wanted to
renegotiate the selling price. That dispute culminated in
Turkmenistan's cutting off gas exports to Iran for three
months. In reality, it appears, Turkmenistan had just entered
into a new sales agreement with the Russian firm Gazprom and
had to find a way out of its deal with the Iranians.
According to Chengiz, and based upon his conversations with
Iranian diplomats in Ashgabat, Iran would like to import much
more than 14 BCM per year. He said it desperately needs the
extra fuel to meet the demand for energy by residents in the
northeastern region of country.
2. (C) Chengiz said that after the record cold last winter,
Turkmenistan is operating at full-capacity to fulfill its
targeted production of 82 BCM this year. Iran, he said, is
aware that the only way for it to increase future imports
from Turkmenistan is to somehow cut into the future shares
already promised to Russian and China, as much as 50 and 40
BCM, respectively. A Turkmen team of negotiators dispatched
to Teheran last month failed to reach an agreement with the
Iranians, but there are plans to continue the negotiations
following the Economic Cooperation Organization (ECO) meeting
scheduled for later this month in Teheran. Chengiz said that
in addition to natural gas, Iran also hopes to begin
importing liquefied natural gas from Turkmenistan, to be
transported via tanker from the Caspian Sea port of
Turkmenbashy.
3. (C) COMMENT: Iran clearly needs more gas from Turkmenistan
and, when push came to shove, was willing to pay more than
double what had previously been agreed. Iran may ultimately
agree to pay the floating price, but attempt to make that
contingent on Turkmenistan agreeing to higher exports.
Turkmenistan indisputably has the upper hand in these
negotiations. END COMMENT.
CURRAN
SIPDIS
STATE FOR SCA/CEN AND NEA/IR,EEB
PLEASE PASS TO USTDA DAN STEIN
USEU FOR SPECIAL ENVOY GRAY
ENERGY FOR EKIMOFF/THOMPSON
COMMERCE FOR HUEPER
E.O. 12958: DECL: 10/09/2018
TAGS: PGOV PINR PREL EPET IR TX
SUBJECT: TURKMENISTAN AND IRAN: FLOATING PRICE GAS DEAL
STILL UNDER NEGOTIATION
Classified By: Charge d'Affaires Sylvia Reed Curran. Reasons 1.4(b) and
(d).
1. (C) A Turkish diplomat confirmed to us today that
notwithstanding earlier press reports to the contrary, no
deal has been reached whereby Iran would purchase gas from
Turkmenistan according to a floating price formula beginning
next year. The diplomat, Hakan Chengiz (please protect),told
emboff that last spring, following a dispute between the two
countries, Turkmenistan had renegotiated the price from the
existing USD 65 per 1000 CM to USD 140 per 1000 CM. (COMMENT:
The Polish ambassador told us that the Iranian ambassador
said this price is only good until the end of this year. END
COMMENT.) Under the previous framework agreement between the
two countries, Turkmenistan had agreed to sell Iran "up to 14
BCM per year" at USD 65 per 1000 CM, but had overcontracted
its gas export capacity and found itself in a bind. At the
time, Turkmenistan said publicly that Iran had failed to
maintain the gas pipeline on its end and that it wanted to
renegotiate the selling price. That dispute culminated in
Turkmenistan's cutting off gas exports to Iran for three
months. In reality, it appears, Turkmenistan had just entered
into a new sales agreement with the Russian firm Gazprom and
had to find a way out of its deal with the Iranians.
According to Chengiz, and based upon his conversations with
Iranian diplomats in Ashgabat, Iran would like to import much
more than 14 BCM per year. He said it desperately needs the
extra fuel to meet the demand for energy by residents in the
northeastern region of country.
2. (C) Chengiz said that after the record cold last winter,
Turkmenistan is operating at full-capacity to fulfill its
targeted production of 82 BCM this year. Iran, he said, is
aware that the only way for it to increase future imports
from Turkmenistan is to somehow cut into the future shares
already promised to Russian and China, as much as 50 and 40
BCM, respectively. A Turkmen team of negotiators dispatched
to Teheran last month failed to reach an agreement with the
Iranians, but there are plans to continue the negotiations
following the Economic Cooperation Organization (ECO) meeting
scheduled for later this month in Teheran. Chengiz said that
in addition to natural gas, Iran also hopes to begin
importing liquefied natural gas from Turkmenistan, to be
transported via tanker from the Caspian Sea port of
Turkmenbashy.
3. (C) COMMENT: Iran clearly needs more gas from Turkmenistan
and, when push came to shove, was willing to pay more than
double what had previously been agreed. Iran may ultimately
agree to pay the floating price, but attempt to make that
contingent on Turkmenistan agreeing to higher exports.
Turkmenistan indisputably has the upper hand in these
negotiations. END COMMENT.
CURRAN