TURKMENISTAN: FOREIGN MINISTER DENIES NATURAL-GAS

C O N F I D E N T I A L SECTION 01 OF 02 ASHGABAT 000211 SIPDIS SIPDIS STATE FOR SCA/CEN, EUR, EEB PLEASE PASS TO USTDA DAN STEIN ENERGY FOR EKIMOFF/THOMPSON COMMERCE FOR HEUPER E.O. 12958: DECL: 02/11/2018 TAGS: PGOV PREL EPET EU RS HU TX SUBJECT: TURKMENISTAN: FOREIGN MINISTER DENIES NATURAL-GAS DEAL IMMINENT WITH HUNGARY REF: A. STATE 13144 (NOTAL) ¶B. BUDAPEST 0124 (NOTAL) Classified By: CDA RICHARD E. HOAGLAND: 1.4 (B),(D) ¶1. (C) Charge met at OOB February 11 with Foreign Minister Rashid Meredov to deliver talking points in para seven below as a non-paper. Meredov closely read the points and then commented, "You should not believe every rumor you hear." Charge assured Meredov his evidence was documentary and extensive. He emphasized to Meredov the United States does not seek to interfere in Turkmenistan's internal affairs but is acting as a friend in this instance in support of Turkmenistan's independence and future prosperity. ¶2. (C) Turning more serious, Meredov said, "Our policy is transparent. We don't play games. President Berdimuhamedov said publicly in May at the tri-lateral (Turkmenistan, Kazakhstan, Russia) summit agreeing to the Prikaskiskyy Pipeline the door will remain open to a Trans-Caspian Pipeline. Charge emphasized any new agreement to provide 10 bcm of natural gas annually through the existing Gazprom network to an individual EU member would make Western investors think twice about Turkmenistan's transparency. ¶3. (C) Emphasizing his evidence is documentary, Charge asked why Turkmenistani ministries and agencies would seem to be entertaining such a potential deal with Hungary. Meredov replied, "There's lots of stuff like that floating around, but it doesn't mean it's serious." Charge replied that such games can get out of control. He added this proposed agreement apparently has been under discussion for nearly three years and originated under Turkmenistan's former President Niyazov. Meredov paused and then said he understood that point, but such a deal as this one could not be concluded without a Turkmenistan-Hungary intergovernmental agreement, and no such agreement exists. Charge pressed, "That may be why a Hungarian delegation is seeking to come to Ashgabat. Meredov answered, "We have not received such a request." Charge noted U.S. Coordinator for Eurasian Energy Diplomacy Ambassador Steven Mann would likely seek to discuss this issue with President Berdimuhamedov during his visit to Ashgabat the last week of February. Meredov noted the point and thanked the Charge for the non-paper. ¶4. (C) COMMENT: The proposed deal is for a Hungarian company, Millander International Ltd., to serve as middleman to deliver at least 10 bcm/yr for 30 years of Turkmenistan's natural gas through the existing Gazprom-controlled pipeline network. Because little public information exists about Millander, we wonder if it might be one of Gazprom's many shell companies. Further, the alleged involvement of RosUkrEnergo does not instill confidence about the transparency of such a proposed deal. END COMMENT. ¶5. (C) Later in the day on February 11, Charge met with French Ambassador Christian Lechervy, German Ambassador Hans Mondorf, British Ambassador Peter Butcher, Ukrainian Ambassador Viktor Mayko, and Polish Ambassador Maciej Lang (Romanian Charge Laurentiu Ciocan was unavailable) to present them the same non-paper and to ask that they encourage their capitals to weigh in on this issue or for Brussels to consider an EU demarche to Ashgabat. Each said he would report soonest to his capital. Ambassador Mayko confirmed, based on the documentary evidence, the Ukrainian company involved is RosUkrEnergo. ¶6. (C) The Government of Turkmenistan's Russian-language ASHGABAT 00000211 002 OF 002 official newspaper, "Neytralniy Turkmenistan," announced on February 11 Deputy Cabinet Chairman for Gas and Oil Tachberdi Tagiyev will lead a Turkmenistani delegation to Brussels February 14-17 for bilateral meetings, although the presence of this delegation in Brussels would provide at least in theory, an opportunity to reinforce the message that such bilateral deals are in neither Turkmenistan's nor Europe's long-term interests. Besides Tagiyev, the Turkmen delegation will include State Agency for Hydrocarbons Director Muradov, Minister of Finance Geldymuradov, Minister of Economic Development Annavaliyev, Central Bank Director Abilov, Minister of Water Management Akmamedov, and Minister of Education Annaamanov. ¶7. (SBU) BEGIN TEXT OF NON-PAPER: We welcome and fully support Turkmenistan's desire to seek new markets and diversify the export routes for its hydrocarbon resources. However, we understand that discussions are very close to conclusion between Turkmenistan and a Hungarian company (about which there is little public information) for the long-term supply of a significant volume of natural gas to Hungary. Specifically, the contract would lock Turkmenistan into delivering a significant new volume of gas via the existing Gazprom-controlled pipeline network. Although you may see short-term benefits, we do not believe this would benefit Turkmenistan's economic sovereignty and independence. Such an agreement would have an immediate negative impact on plans for the Nabucco pipeline, which we believe will eventually become a major transport corridor for Turkmenistan's natural gas to Europe. Agreeing to send a larger volume of Turkmenistan's gas through existing pipelines would create doubts among Western investors about Turkmenistan's desire to pursue other export options. We applaud President Berdimuhamedov ordering an independent international audit of Turkmenistan's hydrocarbon resources, because the audit results will encourage major Western investors. But a major new export agreement for significant volumes through existing pipelines could have the opposite effect. To ensure Turkmenistan's continued independence and increased prosperity, we request the Government of Turkmenistan make no new energy commitments before it establishes an effective, international-standard framework for evaluating project proposals. END TEXT. HOAGLAND