TURKMENISTAN: IRAN'S RECENT CASPIAN-ENERGY RHETORIC

UNCLAS ASHGABAT 001264 SENSITIVE SIPDIS STATE FOR SCA/CEN; EEB; NEA/IR ENERGY FOR EKIMOFF/BURPOE/COHEN COMMERCE FOR EHOUSE E.O. 12958: N/A TAGS: EPET PGOV EINV IR TX SUBJECT: TURKMENISTAN: IRAN'S RECENT CASPIAN-ENERGY RHETORIC ¶1. (U) Sensitive but unclassified. Not for public Internet. ¶2. (SBU) A number of international media outlets recently cited Reza Kasaeizadeh, Managing Director of the National Iranian Gas Export Company, as stating Iran would prevent Turkmenistan from participating in any projects aimed at transporting Turkmen gas via the Caspian Sea. Although Kasaeizadeh's words cannot be considered an official government statement, they still reflect Iran's position on the issue of energy export routes from Central Asia. The only westbound energy export routes from Central Asia that Iran does not oppose are routes that would run through its own territory. Iran is extremely interested in becoming a transit country for gas exports, given Iran's current economic and political isolation. Kasaeizadeh did not mention, however, how Iran would block trans-Caspian projects. ¶3. (SBU) Theoretically, Iran could use the unsettled boundary status of the Caspian Sea as an excuse to impede a trans-Caspian pipeline project by insisting that no international projects should be implemented without the agreement of all littoral states. Iran's position on the Caspian issue is that the Caspian seabed should be divided equally among the littoral states so that each country gets a 20% share. This position is unacceptable to the rest of the littoral states and makes it difficult to foresee settlement of the Caspian delimitation issue in the near future. Iran could also put economic pressure on Turkmenistan by stopping imports of Turkmen gas, cutting oil swap operations, and prohibiting transportation of Turkmenistan-bound goods across its territory. Experts assert that potential economic losses that Turkmenistan would suffer from such measures would be significantly lower than the economic benefits that Turkmenistan would reap from a trans-Caspian pipeline. ¶4. (SBU) COMMENT: Recent Iranian statements regarding its ability to prevent Turkmenistan from pursuing Caspian projects seem to be just that...empty statements. In January 2008, Turkmenistan cut gas supplies to Iran, citing technical difficulties. Iran reportedly tried to strong-arm Turkmenistan into resuming supplies but ended up paying the Turkmen more for gas. As a result, experts believe that Iran's influence over Turkmenistan, especially when it comes to energy issues, is still very limited. END COMMENT. CURRAN