TURKMENISTAN-TO-HUNGARY NATURAL GAS: ALMOST A

S E C R E T SECTION 01 OF 02 ASHGABAT 000224

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E.O. 12958: DECL: 02/13/2018
TAGS: PGOV PREL EPET HU RS TX
SUBJECT: TURKMENISTAN-TO-HUNGARY NATURAL GAS: ALMOST A
DONE DEAL?

REF: A. GAUDIOSI-HOAGLAND E-MAIL DTD 02/11/08


B. ASHGABAT 0211

C. STATE 13144

D. BUDAPEST 0124

Classified By: CDA RICHARD E. HOAGLAND: 1.4 (B),(D)


1. (S) On February 12, Charge met with Polish Ambassador
Maciej Lang and, separately, EU-TACIS Adviser Michael Wilson
(strictly protect both throughout). Wilson was the initial
source of the documentary evidence that negotiations are far
advanced for Hungarian company Millander International Ltd.
to play middle-man to procure for a period of 30 years 10
bcm/yr of Turkmenistan's natural gas for delivery to Hungary.


2. (S) According to Lang, the only outstanding part of the
deal is for RosUkrEnergo to transit the gas through Ukraine.
Most of the Government of Hungary may be in the dark about
the deal because Millander is dealing directly with MOL and,
possibly, with only one or two insiders in the Hungarian
government. Lang alleged that the Kremlin has approved this
deal on behalf of Gazprom and that it has been approved at
the highest level in Ashgabat for an appropriate pay-off. In
the September 2007 letter from Turkmengaz General Manager
Yakshigeldi Kakayev to Millander General Manager Jozsef
Kalman, Kakayev wrote, "I confirm that we are ready to sell
your company 10 billion m3/year Turkmenian natural gas from 1
January 2008 for a 30 years period...based on the purchase
price fixed in the sales contract." According to Wilson,
Kakayev wouldn't dare sell even one cubic meter of gas
without Berdimuhamedov's explicit approval.


3. (S) Lang added that the Hungarian government delegation
that visited Ashgabat at the beginning of December 2007
"definitely discussed gas deliveries," and that the
delegation was cobbled together on short notice and approved
in Ashgabat in record time, even though Hungary does not have
an embassy in Turkmenistan.


4. (S) Lang is especially outraged about the putative role
of RosUkrEnergo. Both he and Ukranian Ambassador Viktor
Mayko claim that RosUkrEnergo is essentially the same as its
predecessor EuralTransGaz, with the same owners,
beneficiaries, and shady contacts, all leading back to
Gazprom. Lang noted that a current scandal in Warsaw is an
expose about former Polish Government officials whom
EuralTransGaz paid off for a deal very similar to the one
Millander is seeking with Turkmenistan. Without proof, Lang
alleged Millander is a stalking horse for Gazprom. The goal?
To tie up more of Turkmenistan's gas so that Nabucco will be
disadvantaged. In a January 29 e-mail from Jozsef Kalman to
Michael Wilson, Kalman writes, "I want to go to Turkmenistan
to sign the sales contract with Turkmengaz ... because we can
(then) sign the Transit Agreement with Gazprom in February
2008."


5. (S) Wilson added additional information. The European
Commission (EC) is fully aware of the Turkmenistan
delegation, led by Deputy Chairman for Oil and Gas Tachberdi
Tagiyev and including State Hydrocarbon Agency Director
Byrammurat Muradov, going to Brussels February 14-17. This
supposedly strictly bilateral (Turkmenistan-Kingdom of
Belgium) delegation was very hastily arranged, and the EC has
allowed "no member state to have a single snippet of
information" about the agenda. The EC is keeping everyone in
the dark," Wilson alleged. According to Wilson, Turkmenistan
has cut its embassy in Brussels (bilateral, EU, NATO) out of
the loop, except for meet-and-greet at the airport. All

ASHGABAT 00000224 002 OF 002


schedule arrangements are being made by the just-appointed
Honorary Consul of Turkmenistan in Brussels, ENNEX chief Koen
Minne, who hosted the business meetings for President
Berdimuhamedov when the president visited Brussels in
November 2007. Wilson speculates all the Millander-deal
principals might meet in Brussels to hammer out final details
and perhaps even sign the agreement.


6. (S) Wilson said Turkmenistan Foreign Minister Rashid
Meredov in fact has the full documentary package about the
Millander deal that Embassy Ashgabat forwarded by e-mail to
the Department and to Embassy Budapest, because Wilson
himself passed it to Meredov o/a January 30 at the request of
Millander International President Jozsef Kalman. (NOTE:
This would cast Charge's February 11 conversation with
Meredov (reftel B) in a rather different light. An
intergovernmental agreement between Turkmenistan and Hungary
might not be necessary if the deal is actually with MOL. END
NOTE.)


7. (S) According to Wilson, former OSCE Ambassador to
Turkmenistan, Istvan Venczel, currently the "representative
of EBES" (NFI) in Tashkent, is also trying to facilitate
contacts between Millander and the top levels of the
Government of Turkmenistan. As a third facilitation channel,
Wilson says, Millander is using the Hungarian Embassy in
Tehran, information Wilson confirmed at the Iranian National
Day reception in Ashgabat the evening of February 11.


8. (S) COMMENT: While we cannot confirm much of this
information, we find a fair amount of it credible, especially
because it is consonant with the non-transparency of
former-Soviet business deals. We would suggest the
Department might want to consider authorizing a separate
demarche in Kyiv. END COMMENT.
HOAGLAND