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