Identifier
Created
Classification
Origin
08ASTANA2008
2008-10-08 11:33:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Astana
Cable title:
KAZAKHSTAN: KAZMUNAIGAS PRESIDENT DISCUSSES GEORGIA,
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UNCLAS SECTION 01 OF 02 ASTANA 002008
C O R R E C T E D COPY: DROPPED AN ADDRESSEE
SENSITIVE
SIPDIS
STATE FOR SCA/CEN, EEB/ESC
E.O. 12958: N/A
TAGS: PGOV PREL EPET EINV GG KZ
SUBJECT: KAZAKHSTAN: KAZMUNAIGAS PRESIDENT DISCUSSES GEORGIA,
CRUDE TRANSPORT WITH AMBASSADOR STEVE MANN
ASTANA 00002008 001.3 OF 002
UNCLAS SECTION 01 OF 02 ASTANA 002008
C O R R E C T E D COPY: DROPPED AN ADDRESSEE
SENSITIVE
SIPDIS
STATE FOR SCA/CEN, EEB/ESC
E.O. 12958: N/A
TAGS: PGOV PREL EPET EINV GG KZ
SUBJECT: KAZAKHSTAN: KAZMUNAIGAS PRESIDENT DISCUSSES GEORGIA,
CRUDE TRANSPORT WITH AMBASSADOR STEVE MANN
ASTANA 00002008 001.3 OF 002
1. (U) Sensitive but unclassified. Not for public Internet.
2. (U) SUMMARY: KazMunaiGas (KMG) President Kairgeldy Kabyldin
informed Eurasian Energy Diplomacy Coordinator Ambassador Steve Mann
on October 6 that Kazakhstan remains committed to its strategic
investments in Georgia. Kabyldin requested assistance in persuading
Azerbaijan to grant access to the Baku-Supsa pipeline, and also
confirmed that British Petroleum (BP) is the only consortium partner
which has not agreed to expand the capacity of the Caspian Pipeline
Consortium (CPC) pipeline. END SUMMARY.
CONTINUED COMMITMENT TO GEORGIA
3. (SBU) In an October 6 meeting, KazMunaiGas (KMG) President
Kairgeldy Kabyldin emphasized to visiting Eurasian Energy Diplomacy
Coordinator Ambassador Steve Mann that Kazakhstan's long-term
strategic investments in Georgia were not adversely affected by the
conflict in South Ossetia. He cited as examples KMG's decision to
move forward with plans to expand the capacity of the Batumi oil
terminal and explore the further development of the
Baku-Tbilisi-Ceyhan (BTC) pipeline and rail infrastructure in
Georgia. (NOTE: Regarding rumors that KMG intends to sell its
KazTransGas-Tbilisi subsidiary, Kabyldin told the media on October 7
that KMG would be willing to consider such a move, but that
everything would depend on what it was offered. END NOTE.)
HELP WANTED WITH BAKU-SUPSA
4. (SBU) Kabyldin reiterated Kazakhstan's support for
diversification of energy transport routes, including transport via
tanker from Aktau to Baku, but noted that even with multiple routes
and the anticipated expansion of the Atyrau-Samara and Caspian
Pipeline Consortium (CPC) pipelines, oil transportation capacity has
become increasingly constrained for Kazakhstan. "We have big
transportation problems," he said. Kazakhstan plans to ship up to
10 million tons of crude annually through Atyrau-Samara and could
ship up to an additional 5 million tons of TCO crude via the
Baku-Supsa pipeline "right now," said Kabyldin. TCO currently pays
more than $35 per ton to transport oil by rail from Baku to Batumi,
whereas it could send oil through the Baku-Supsa pipeline at
approximately $0.37 per barrel. Kabyldin said that KMG is prepared
to buy the Baku-Supsa pipeline outright, or acquire shares in it,
but the Government of Azerbaijan refuses to sell shares or grant
access. (NOTE: The Baku-Supsa pipeline, which has a capacity of
145,000 barrels per day, is owned by the Azerbaijan International
Operating Company (AIOC),the Azerbaijani national oil company
SOCAR, and the Government of Georgia. END NOTE.)
5. (SBU) Kabyldin cited three main reasons why the Government of
Azerbaijan has not agreed to grant access to Baku-Supsa: (1) AIOC
is building up its terminal in Kulevi, Georgia, and thus wants crude
to flow to Kulevi, not Supsa; (2) AIOC would have to incur
significant costs to modernize the Baku-Supsa pipeline; and (3) the
owners of the Cross-Caspian Middle East Petroleum corporation would
lose revenue if oil was transported via Supsa instead of Batumi.
Kabyldin asked for assistance from the U.S. government to persuade
President Aliyev to grant access to Baku-Supsa. He said the only
way to resolve this is to appeal directly to President Aliyev: "If
you convince Aliyev, SOCAR will soon get the message." Kabyldin
warned that if they cannot reach agreement with Azerbaijan on
shipments from Baku onward, then their transportation options would
be limited mainly to Russia. "Without Baku," he said, "there can be
no policy of transportation diversification."
BP THE LONE HOLDOUT ON CPC EXPANSION
6. (SBU) According to Kabyldin, all of the CPC consortium members
-- with the notable exception of BP -- have agreed to expand CPC
capacity. "BP is giving us a headache," he said. (NOTE: BP has
ASTANA 00002008 002.3 OF 002
little upstream stake in CPC expansion and is apparently holding
firm to a short-term, cost of capital position. END NOTE.) BP owns
approximately 6% of CPC through its holdings in Lukarco and
Kazakhstan Pipeline Ventures (KPV). Kabyldin said that KMG is
prepared to purchase BP's share of KPV, but Lukoil is not as eager
to purchase BP's share of Lukarco. Kabyldin maintained that Lukoil
did not pay for its current share in Lukarco and thus would be
reluctant to pay for additional Lukarco shares. (NOTE: Press
reports have indicated that BP is asking for up to $1 billion for
its combined share in CPC. END NOTE). In any case, said Kabyldin,
"the ball is squarely in BP's court."
7. (U) This cable was not/not cleared with Ambassador Mann.
HOAGLAND
C O R R E C T E D COPY: DROPPED AN ADDRESSEE
SENSITIVE
SIPDIS
STATE FOR SCA/CEN, EEB/ESC
E.O. 12958: N/A
TAGS: PGOV PREL EPET EINV GG KZ
SUBJECT: KAZAKHSTAN: KAZMUNAIGAS PRESIDENT DISCUSSES GEORGIA,
CRUDE TRANSPORT WITH AMBASSADOR STEVE MANN
ASTANA 00002008 001.3 OF 002
1. (U) Sensitive but unclassified. Not for public Internet.
2. (U) SUMMARY: KazMunaiGas (KMG) President Kairgeldy Kabyldin
informed Eurasian Energy Diplomacy Coordinator Ambassador Steve Mann
on October 6 that Kazakhstan remains committed to its strategic
investments in Georgia. Kabyldin requested assistance in persuading
Azerbaijan to grant access to the Baku-Supsa pipeline, and also
confirmed that British Petroleum (BP) is the only consortium partner
which has not agreed to expand the capacity of the Caspian Pipeline
Consortium (CPC) pipeline. END SUMMARY.
CONTINUED COMMITMENT TO GEORGIA
3. (SBU) In an October 6 meeting, KazMunaiGas (KMG) President
Kairgeldy Kabyldin emphasized to visiting Eurasian Energy Diplomacy
Coordinator Ambassador Steve Mann that Kazakhstan's long-term
strategic investments in Georgia were not adversely affected by the
conflict in South Ossetia. He cited as examples KMG's decision to
move forward with plans to expand the capacity of the Batumi oil
terminal and explore the further development of the
Baku-Tbilisi-Ceyhan (BTC) pipeline and rail infrastructure in
Georgia. (NOTE: Regarding rumors that KMG intends to sell its
KazTransGas-Tbilisi subsidiary, Kabyldin told the media on October 7
that KMG would be willing to consider such a move, but that
everything would depend on what it was offered. END NOTE.)
HELP WANTED WITH BAKU-SUPSA
4. (SBU) Kabyldin reiterated Kazakhstan's support for
diversification of energy transport routes, including transport via
tanker from Aktau to Baku, but noted that even with multiple routes
and the anticipated expansion of the Atyrau-Samara and Caspian
Pipeline Consortium (CPC) pipelines, oil transportation capacity has
become increasingly constrained for Kazakhstan. "We have big
transportation problems," he said. Kazakhstan plans to ship up to
10 million tons of crude annually through Atyrau-Samara and could
ship up to an additional 5 million tons of TCO crude via the
Baku-Supsa pipeline "right now," said Kabyldin. TCO currently pays
more than $35 per ton to transport oil by rail from Baku to Batumi,
whereas it could send oil through the Baku-Supsa pipeline at
approximately $0.37 per barrel. Kabyldin said that KMG is prepared
to buy the Baku-Supsa pipeline outright, or acquire shares in it,
but the Government of Azerbaijan refuses to sell shares or grant
access. (NOTE: The Baku-Supsa pipeline, which has a capacity of
145,000 barrels per day, is owned by the Azerbaijan International
Operating Company (AIOC),the Azerbaijani national oil company
SOCAR, and the Government of Georgia. END NOTE.)
5. (SBU) Kabyldin cited three main reasons why the Government of
Azerbaijan has not agreed to grant access to Baku-Supsa: (1) AIOC
is building up its terminal in Kulevi, Georgia, and thus wants crude
to flow to Kulevi, not Supsa; (2) AIOC would have to incur
significant costs to modernize the Baku-Supsa pipeline; and (3) the
owners of the Cross-Caspian Middle East Petroleum corporation would
lose revenue if oil was transported via Supsa instead of Batumi.
Kabyldin asked for assistance from the U.S. government to persuade
President Aliyev to grant access to Baku-Supsa. He said the only
way to resolve this is to appeal directly to President Aliyev: "If
you convince Aliyev, SOCAR will soon get the message." Kabyldin
warned that if they cannot reach agreement with Azerbaijan on
shipments from Baku onward, then their transportation options would
be limited mainly to Russia. "Without Baku," he said, "there can be
no policy of transportation diversification."
BP THE LONE HOLDOUT ON CPC EXPANSION
6. (SBU) According to Kabyldin, all of the CPC consortium members
-- with the notable exception of BP -- have agreed to expand CPC
capacity. "BP is giving us a headache," he said. (NOTE: BP has
ASTANA 00002008 002.3 OF 002
little upstream stake in CPC expansion and is apparently holding
firm to a short-term, cost of capital position. END NOTE.) BP owns
approximately 6% of CPC through its holdings in Lukarco and
Kazakhstan Pipeline Ventures (KPV). Kabyldin said that KMG is
prepared to purchase BP's share of KPV, but Lukoil is not as eager
to purchase BP's share of Lukarco. Kabyldin maintained that Lukoil
did not pay for its current share in Lukarco and thus would be
reluctant to pay for additional Lukarco shares. (NOTE: Press
reports have indicated that BP is asking for up to $1 billion for
its combined share in CPC. END NOTE). In any case, said Kabyldin,
"the ball is squarely in BP's court."
7. (U) This cable was not/not cleared with Ambassador Mann.
HOAGLAND