BAKU ENERGY SUMMIT ADVANCES U.S. EURASIAN ENERGY

C O N F I D E N T I A L SECTION 01 OF 03 BAKU 001097

E.O. 12958: DECL: 11/18/2018
TAGS: PGOV PREL ENRG AJ TK
SUBJECT: BAKU ENERGY SUMMIT ADVANCES U.S. EURASIAN ENERGY
POLICY

Classified By: Deputy Chief of Mission Donald Lu, Reasons 1.4 (b,d)


1. (C) SUMMARY: On November 13-14 Azerbaijan President Ilham
Aliyev hosted the IV Energy Summit in Baku, following up on
previous energy summits in Krakow (May 2007),Vilnius
(October 2007) and Kyiv (May 2008). Prominent attendees
included the Heads of State of Turkey, Georgia, Ukraine,
Lithuania and Poland. During the Summit Kazakhstan and
Azerbaijan signed a key agreement on transport of Kazakh oil,
and Azerbaijan and Georgia signed a multi-year gas supply
contract, Georgia's first multi-year gas contract since its
independence. Additionally, Turkish President Gul told USG
Presidential Delegation members that he sought to cooperate
with Azerbaijan on removing the current barriers as the way
of actualizing the Southern Corridor for gas, but that he
wished to do so "quietly, without bragging," so as not to
irritate Russia.


2. (C) SUMMARY (continued): Summit Speeches and the Summit's
Final Declaration, endorsed by Summit participants with the
notable exception of Turkmenistan and Kazakhstan, stressed
adhering to the fundamental principles of the Energy Charter
Treaty and to diversifying energy sources and routes. The
Declaration's key passage mentioned supporting "joint
projects directed to the strengthening of energy security of
Europe, especially gas transit projects, including those
across the territories of Georgia and Turkey, including TGI,
Nabucco, and others." Opposition Azerbaijani press referred
to the Summit as "the Meeting of Russia's Enemies," as
Georgia, Poland and Lithuania were clear in their
denunciation of Russia's use of the "energy weapon." END
SUMMARY.


3. (U) On November 13-14 Azerbaijan President Ilham Aliyev
hosted the IV Energy Summit in Baku, following up on previous
energy summits in Krakow (May 2007),Vilnius (October 2007)
and Kyiv (May 2008). Prominent Heads of State attendees
included the Presidents of Turkey, Georgia, Ukraine,
Lithuania and Poland, with non-HOS representation from
Bulgaria, Estonia, Greece, Hungary, Italy, Latvia, Romania,
Switzerland, and, from the EU, Energy Commissioner Andris
Piebalgs (see Appendix for a fuller list of attendees).


4. (C) The three-person U.S. Presidential Delegation was
headed by Energy Secretary Bodman, with Special Envoy for
Eurasian Energy Diplomacy C. Boyden Gray and Ambassador Derse
being the other two official members of the White
House-designated Presidential Delegation. EUR DAS Bryza, in
Baku for Minsk Group activities, also participated in all
major Summit-related activities. In addition to attending
the November 14 Summit itself, Secretary Bodman had separate
bilateral meetings with President Aliyev (septel),Turkish
President Gul, and Ukraine President Yushchenko.

NOVEMBER 13 MINISTERIAL
--------------


5. (C) The GOAJ Ministry of Energy and Industry hosted a
November 13 afternoon Ministerial level meeting during which
a draft Final Summit Declaration was handed out and
discussed. After two hours of inconclusive debate during
which some participants were holding out for explicit mention
of their respective countries' favored projects while others
sought to keep the declaration at a more general level, the
meeting was suspended until eleven PM that same day. During
the follow-on meeting, which lasted until the early morning
hours of the following day, a key compromise to the question
of naming projects was introduced by DAS Bryza and
subsequently worked on by SOCAR Vice-President Elshad
Nassirov in conjunction with the Greek and Italian
delegations. This proposed change explicity mentioned ITGI
and Nabucco, but shunned a fuller list of specific projects
in favor of the phrase "gas transit projects, including those
across the territories of Georgia and Turkey, including TGI,
Nabucco, and others." Only Kazakhstan and Turkmenistan did
not accede to the Final Declaration.

NOVEMBER 14 SUMMIT
--------------


6. (C) The November 14 Summit, held at Gulustan Palace,
consisted entirely of speeches by the participating Heads of
Delegation (upcoming septel). All participants' speeches
focused on mutual interdependency and the consequent need for
energy cooperation. Highlights included President Aliyev's
opening remarks, which focused on Azerbaijan's efforts to
create broader regional cooperation on energy, and on
Azerbaijan's ability to become a gas exporter to Europe.
Georgian President Saaskashvili's remarks were a blunt
denunciation of Russia's recent aggressions in his country.
Turkish President Gul said that the Southern Corridor "was at
the top" of Turkey's agenda, and specifically mentioned the
Nabucco and ITGI projects. Concerning Nabucco, Gul said that
its success "depended on gas supply...in this respect we are
in close contact with Azerbaijan and Turkmenistan."


7. (C) In a private discussion following with SE Gray,
President Gul said that Turkey sought to work with Azerbaijan
to implement its Southern Corridor strategy. However, it had
to do so "quietly, without bragging" in order not to
aggrevate its relations with Russia, who was putting
"tremendous pressure" on Turkey. Gul expressed similar
sentiments in his meeting with Energy Secretary Bodman
(septel).

NEW AGREEMENTS
--------------


8. (C) Azerbaijan used the Summit to launch two major new
agreements. The first an oil transportation agreement
between SOCAR and KMG, in order to handle the expected Kazakh
volumes from Kashagan (septel). The second agreement was a
multi-year gas supply agreement between SOCAR and Georgia,
Georgia's first multi-year gas supply contract since its
independence. In a November 15 meeting with Ambassador
Derse, Georgian Energy Minister Kheteguri expressed his
government's satisfaction with this agreement,which obviated
the annual winter exercise of scrambling to find sufficient
gas supplies (septel).

MEDIA COVERAGE
--------------


9. (C) Although not a major story in international press, in
Azerbaijan both pro-government and opposition media gave
broad coverage to the Summit, but with decidedly different
approaches. All national TV and pro-government newspapers
highlighted Azerbaijan's leadership in support of energy
security cooperation, without any mention of Russia or
disagreements over the Summit Declaration. Opposition papers
however highlighted the Summit as "Russia's Enemies Meetin in
Baku," and took pains to outline divisions over the
Declaration text.


10. (C) COMMENT: President Aliyev is to be commended for his
initiatve in expanding the purview of the Summit to encompass
Southern Corridor issues, beyond the traditional tentpole of
the Odessa-Brody pipeline, which most knowledgeable
Azerbaijan participants see as unrealistic in the short-term.
In this regard he is also to be commended for his courage in
hosting a summit that was noticeable by its promulgation of
energy principles and projects that cannot fail to anger its
Russian neighbor. While it isn't yet clear whether his
recent discussions with GOT President Gul will help remove
the barriers blocking Azerbaijan export of its Shah Deniz
Phase Two gas to Europe, at a minimum his efforts in this
regard seem to have given momentum to a process that has been
esssentially stalled for over a year. Similarly, the
announcement of a multi-year gas supply contract with Georgia
and an oil transportation agreement with Kazakhstan show that
President Aliyev and Azerbaijan continue to work diligently
on an Eurasian Energy Strategy that is in remarkable alliance
with ours. END COMMENT.


APPENDIX: SUMMIT ATTENDEES

Azerbaijan ) President Ilham Aliyev
Turkey ) President Abdullah Gul
Georgia ) President Mikhail Saakashvili
Ukraine ) President Victor Yuschenko
Lithuania ) President Valdas Adamkus
Poland ) President Lech Kachinsky
Romania ) Foreign Minister Comenescu
Bulgaria ) Vice-President Angel Marin
Hungary ) Prime Minister Ferenc Gyurcsany
Estonia ) Prime Minister Andrus Ansipi
Kazakhstan ) Minister of Energy and Natural Resources Sauat
Minbayev
Romania ) Foreign Affairs Minister Lazar Komenesku
Greece ) Development Minister Christos Folias
Italy ) Deputy Foreign Affairs Minister Alfredo Mantika
Turkmenistan ) Deputy Foreign Affairs Minister Khoshgeldi
Babayev
Latvia ) Vice-Minister of Economy Bergholz
Switzerland - Ambassador to Azerbaijan Alain Guidetti
US ) Energy Secretary Samuel Bodman
DERSE