Identifier
Created
Classification
Origin
08MOSCOW2713
2008-09-10 12:01:00
CONFIDENTIAL
Embassy Moscow
Cable title:
AZERBAIJANI EMBASSY SAYS RUSSIAN OFFER TO BUY GAS
how-toVZCZCXRO9455 PP RUEHFL RUEHKW RUEHLA RUEHROV RUEHSR DE RUEHMO #2713 2541201 ZNY CCCCC ZZH P 101201Z SEP 08 FM AMEMBASSY MOSCOW TO RUEHC/SECSTATE WASHDC PRIORITY 9919 INFO RUCNCIS/CIS COLLECTIVE PRIORITY RUEHZL/EUROPEAN POLITICAL COLLECTIVE PRIORITY RUEHXD/MOSCOW POLITICAL COLLECTIVE PRIORITY RHEHNSC/NSC WASHDC PRIORITY RHMFISS/DEPT OF ENERGY WASHINGTON DC PRIORITY
C O N F I D E N T I A L MOSCOW 002713
SIPDIS
DEPT FOR EUR/RUS, FOR EEB/ESC/IEC GALLOGLY AND WRIGHT
EUR/CARC, SCA (GALLAGHER, SUMAR)
DOE FOR FREDRIKSEN, HEGBORG, EKIMOFF
E.O. 12958: DECL: 09/08/2018
TAGS: EPET ENRG ECON PREL RS
SUBJECT: AZERBAIJANI EMBASSY SAYS RUSSIAN OFFER TO BUY GAS
"MAKES SENSE"
Classified By: DCM Eric S. Rubin for Reasons 1.4 (b/d)
---------------------------
RUSSIAN OFFER "MAKES SENSE"
---------------------------
C O N F I D E N T I A L MOSCOW 002713
SIPDIS
DEPT FOR EUR/RUS, FOR EEB/ESC/IEC GALLOGLY AND WRIGHT
EUR/CARC, SCA (GALLAGHER, SUMAR)
DOE FOR FREDRIKSEN, HEGBORG, EKIMOFF
E.O. 12958: DECL: 09/08/2018
TAGS: EPET ENRG ECON PREL RS
SUBJECT: AZERBAIJANI EMBASSY SAYS RUSSIAN OFFER TO BUY GAS
"MAKES SENSE"
Classified By: DCM Eric S. Rubin for Reasons 1.4 (b/d)
--------------
RUSSIAN OFFER "MAKES SENSE"
--------------
1. (C) In a September 4 meeting, Israfil Ahmadov, Economic
Counselor at the Embassy of Azerbaijan, told us that the GOAZ
is "considering" Gazprom's offer to buy Azeri gas at
"European" prices. He said the GOAZ has not made a decision
yet, but that it would have to respond to Russia's offer at
some point. He said Central Asian producers are happy to
sell to all buyers, but cautioned that Russia has been "very
active" in the region and has gained favor recently as a
result. Noting the slow pace of Western action on energy
issues, Ahmadov suggested that Europe and the U.S. are
"losing" in their bid to move future Azeri gas directly west.
2. (C) Ahmadov said Russia had approached Azerbaijan "in
friendship" and has offered "full price" for its
hydrocarbons. Given that selling gas to Russia would be
commercially competitive, would diversify Azerbaijan's gas
export routes, and would pay political dividends with Russia,
Russia's oQer "makes sense" for Azerbaijan, Ahmadov
stressed. With regard to Nabucco, Ahmadov said Azerbaijan is
supportive, but noted that the project does not depend solely
on Azerbaijan.
--------------
CAN'T IGNORE POLITICAL ANGLE
--------------
3. (C) Expounding on the need for better political relations
with Moscow, Ahmadov pointed to Armenia's strong political
and cultural ties to Russia. He said the Nagorno-Karabakh
issue and Armenia's close relations with Russia complicate
Azerbaijan's approach to all aspects of its dealings with
Russia -- "not being friends with Russia is definitely not
advantageous for us." Recounting a 1990 Russian attack in
Baku that killed many Azeris, and likening it to the recent
events in Georgia, Ahmadov said the U.S. needs to understand
and value the complicated nature of the Azerbaijan-Russia
relationship.
--------------
COMMENT
--------------
4. (C) The Azeri response to Russian overtures strikes us as
short-sighted. At the end of the day, "diversifying" to a
customer whose actions depend on the potentially arbitrary
decisions of a few specific government leaders is not a sound
business decision regardless of the price. A more
constructive approach for Azerbaijan might be to leverage
Russia's offer as a means of forcing a more malleable
approach by Turkey on transit terms. That said, this is
likely not a decision that will be made solely on commercial
grounds. End comment.
BEYRLE
SIPDIS
DEPT FOR EUR/RUS, FOR EEB/ESC/IEC GALLOGLY AND WRIGHT
EUR/CARC, SCA (GALLAGHER, SUMAR)
DOE FOR FREDRIKSEN, HEGBORG, EKIMOFF
E.O. 12958: DECL: 09/08/2018
TAGS: EPET ENRG ECON PREL RS
SUBJECT: AZERBAIJANI EMBASSY SAYS RUSSIAN OFFER TO BUY GAS
"MAKES SENSE"
Classified By: DCM Eric S. Rubin for Reasons 1.4 (b/d)
--------------
RUSSIAN OFFER "MAKES SENSE"
--------------
1. (C) In a September 4 meeting, Israfil Ahmadov, Economic
Counselor at the Embassy of Azerbaijan, told us that the GOAZ
is "considering" Gazprom's offer to buy Azeri gas at
"European" prices. He said the GOAZ has not made a decision
yet, but that it would have to respond to Russia's offer at
some point. He said Central Asian producers are happy to
sell to all buyers, but cautioned that Russia has been "very
active" in the region and has gained favor recently as a
result. Noting the slow pace of Western action on energy
issues, Ahmadov suggested that Europe and the U.S. are
"losing" in their bid to move future Azeri gas directly west.
2. (C) Ahmadov said Russia had approached Azerbaijan "in
friendship" and has offered "full price" for its
hydrocarbons. Given that selling gas to Russia would be
commercially competitive, would diversify Azerbaijan's gas
export routes, and would pay political dividends with Russia,
Russia's oQer "makes sense" for Azerbaijan, Ahmadov
stressed. With regard to Nabucco, Ahmadov said Azerbaijan is
supportive, but noted that the project does not depend solely
on Azerbaijan.
--------------
CAN'T IGNORE POLITICAL ANGLE
--------------
3. (C) Expounding on the need for better political relations
with Moscow, Ahmadov pointed to Armenia's strong political
and cultural ties to Russia. He said the Nagorno-Karabakh
issue and Armenia's close relations with Russia complicate
Azerbaijan's approach to all aspects of its dealings with
Russia -- "not being friends with Russia is definitely not
advantageous for us." Recounting a 1990 Russian attack in
Baku that killed many Azeris, and likening it to the recent
events in Georgia, Ahmadov said the U.S. needs to understand
and value the complicated nature of the Azerbaijan-Russia
relationship.
--------------
COMMENT
--------------
4. (C) The Azeri response to Russian overtures strikes us as
short-sighted. At the end of the day, "diversifying" to a
customer whose actions depend on the potentially arbitrary
decisions of a few specific government leaders is not a sound
business decision regardless of the price. A more
constructive approach for Azerbaijan might be to leverage
Russia's offer as a means of forcing a more malleable
approach by Turkey on transit terms. That said, this is
likely not a decision that will be made solely on commercial
grounds. End comment.
BEYRLE