IRAN/TURKMENISTAN: ENERGY WAS THE FOCUS OF

C O N F I D E N T I A L SECTION 01 OF 02 ASHGABAT 000283 SIPDIS STATE FOR SCA/CEN, NEA/IR AND INL E.O. 12958: DECL: 03/02/2019 TAGS: IR PGOV PREL SNAR TX SUBJECT: IRAN/TURKMENISTAN: ENERGY WAS THE FOCUS OF BERDIMUHAMEDOV'S TEHRAN VISIT REF: ASHGABAT 0033 Classified By: Charge Richard Miles, per reasons 1.4(b) and (d). ¶1. (C) SUMMARY: Ashgabat-based diplomats with close ties to the Iranian Embassy say that increased energy cooperation was the focus of talks between President Berdimuhamedov and Iranian leaders during a February 13-15 visit to Tehran. In addition to an energy pact, in which Iran reportedly agreed to pay USD 300 per bcm for Turkmen gas, the two sides agreed to the establishment of an intergovernmental economic commission, an accord on the exchange of prisoners, and a framework agreement on Iran's role in developing Turkmenistan's Yolatan gas field. Berdimuhamedov is also expected to attend the regional Economic Cooperation Organization (ECO -- currently chaired by Iran) meeting in Tehran on March 11th. END SUMMARY. ¶2. (C) Diplomatic sources in Ashgabat who meet regularly with Iranian Embassy diplomats told Iran Watcher this week that energy cooperation between Iran and Turkmenistan topped the agenda in President Berdimuhamedov's 13-15 February visit to Iran, when he met with President Ahmadinejad and Supreme Leader Khamenei. Michael Wilson, the EU-TACIS representative in Turkmenistan for the past ten years and a close friend of Iranian Ambassador Forqani, said that Berdimuhamedov and Khamenei held a three-hour meeting during the visit in which the Supreme Leader is said to have made clear that Iran sees itself as the "key player" for the region's energy security, a paramount concern for Turkmenistan. In Wilson's view, both Berdimuhamedov and Khamenei operate on a "much higher intellectual plane than people give them credit for" when it comes to discussions of global energy security. He said that Turkmenistan, uncomfortable dealing with private businesses, prefers working directly with governments such as Iran, which it increasingly sees as the "third way" as it moves away from the risks of exporting gas through just one major pipeline (to Russia). ¶3. (C) According to Hakan Chengiz, the Turkish DCM, who meets regularly with diplomats from the Iranian Embassy and was briefed by them on the visit, Berdimuhamdov and Ahmadinejad signed three separate Memoranda of Understanding (MOUs) and one more preliminary framework agreement: The first provides for the creation of a Turkmenistan intergovernmental economic commission. The new commission is expected to operate in the same fashion as a similar commission in place between Turkmenistan and Turkey. While it will probably be headed officially on the Turkmen side by President Berdimuhamdov, Chengiz anticipates that the President will delegate that role to either FM Meredov or DFM Hajiev. (NOTE: Hajiev, a Farsi speaker, was in Tehran in December to represent Turkmenistan at the regional ECO meeting and entered into several agreements with Iran at that time. Meredov traditionally represents the Turkmen on the Turkey-Turkmenistan Commission. END NOTE.) TURKMENISTAN TO PAY LESS FOR GAS THAN RUSSIA, BUT MORE OVER THE LONG RUN ¶4. (C) In the second MOU, according to Chengiz, Iran has reportedly agreed to pay USD 300 per bcm for Turkmen gas for the first six months of 2009. Chengiz noted that he learned most of the details (including the price) of the second MOU from the Turkmen, not the Iranians. Although Iran had been pushing for more than a year for Turkmenistan to increase its gas exports to them from eight to 14 bcma, the Turkmen will continue to hold them to eight, but have agreed to allow Iran to participate in developing a portion of the Yolatan gas field. The Iranians told Chengiz that they are hopeful that Iran will ultimately be able to increase their gas imports once gas from that field becomes available. He noted that the Yolatan deal has been part of a framework agreement only, with details to be set forth in a later, more formal agreement. The framework agreement reportedly mentions a goal of yearly exports to Iran reaching 14 bcma. ¶5. (C) Chengiz said that although Russia will initially pay more than USD 300 per bcm during the first six months of 2009, their agreement with the Turkmen is per quarter of 2009, and set to decrease progressively throughout the year, so that, on average, Iran will ultimately pay more than Russia for Turkmen gas. According to Chengiz, the Iranians he spoke with acknowledged that Russia was getting a better deal and were "not happy about it." He said that Iran would like to continue negotiations in the area of energy cooperation with a view to increasing its role in Turkmenistan's energy sector, and particularly increasing sales of gas to Iran. PRISONER EXCHANGE ¶6. (C) The third agreement signed in Tehran reportedly relates to the exchange of prisoners between Iran and Turkmenistan. Chengiz understands that this is more an issue for Iran, as there are apparently a number (he did not know how many) of Iranian citizens currently in Turkmenistan for drug-related offenses. (NOTE: As reported reftel, consular issues, including the status of Iranians detained in Turkmenistan, was the subject of an MOU that DFM Hajiev and Ahmadinejad signed in Tehran in December. Not only have a number of Iranian truck drivers been detained in Turkmenistan for alleged narcotics smuggling, the drivers continue to complain about visa reciprocity problems and poor facilities for their use in Turkmenistan. In addition, there have reportedly been problems in the border villages on both sides, including an incident two years ago when an Iranian sheepherder inadvertently crossed into Turkmenistan and was shot and killed. END NOTE.) ¶7. (C) COMMENT: From all accounts, the Iranians were anxious for Berdimuhamedov to visit and are delighted that he plans to be at the ECO summit later this month. It is Iran, after all, that has the greatest stake in promoting closer ties with Turkmenistan, particularly in the energy sector, but also in ensuring that economic and cultural ties with its northern neighbor, with which it shares its longest border, are enhanced. This is a prospect that can only help Iran as it works to boost its influence in Central Asia. END COMMENT. MILES