ENI EXPLORING GAS PROJECT TO BRING TURKMENISTAN

C O N F I D E N T I A L ROME 001382

SIPDIS

E.O. 12958: DECL: 12/16/2019
TAGS: ECON ENRG IT
SUBJECT: ENI EXPLORING GAS PROJECT TO BRING TURKMENISTAN
GAS TO BULGARIA

Classified By: Classified By: ECMIN George White
for reasons 1.4 (b) and (d)


1. (C) Summary: Eni's CEO Scaroni told Post that his company
is exploring a gas-swap deal with Turkmenistan and Turkey to
bring 5 billion cubic meters of gas per year to Bulgaria and
perhaps other parts of Eastern Europe. This project may be an
attempt by Eni to portray itself as supporting EU energy
diversification; given Eni's poor record on this issue, this
project should be viewed with skepticism. End Summary.


2. ( C ) On November 10 Eni,s CEO Scaroni informed Post that
it is discussing with Turkmenistan and Turkey a gas-swap
project to bring about 5 billion cubic meters of gas per year
to Bulgaria, and perhaps other Eastern European markets.
Scaroni explained that Eni is proposing to liquefy
Turkmenistan gas at the Caspian Sea port of Turkmenbasy, ship
it and re-gasify it in Baku, Azerbaijan, then send it through
the existing Baku-Georgia-Turkey gas pipeline to sell to
Turkey,s BOTAS energy company. BOTAS in turn would re-sell
the same amount of gas to Eni in Bulgaria. Scaroni estimated
that this project would not require a big investment as it
would only need a few gas compression stations and largely
use existing gas pipeline infrastructure. Although Scaroni
did not mention it, presumably Eni would have to build a
plant in Turkmenbasy to liquefy the gas and a re-gasification
plant in Baku (Scaroni only mentioned the use of "CNG"
technology to liquefy the gas). Scaroni said that this
project would indirectly open the way for Turkmenistan gas to
reach Europe.


3. (C) Scaroni said he already discussed this project with
Turkmenistan,s president Berdimuhamedov during the latter's
November 11 official state visit to Rome, and that in a
separate meeting Turkmenistan,s Energy Minister expressed
enthusiasm. Scaroni said that Eni will follow-up with BOTAS
to better ascertain its interest in this project. He added
that if both companies agree to work on such a gas swap deal
then some type of project development agreement could be
signed during Turkey,s Prime Minister Erdogan's Rome visit
on December 16 (Note: This visit has been postponed due to PM
Berlusconi's two-week hospital recovery from wounds received
at the December 13 Milan attack incident).


4. (C) Although Eni,s proposed gas-swap project does not
involve Russian companies, Scaroni stated that he would seek
Russia's acquiescence, discussing the project soon with
Russian Deputy Prime Minister Sechin. Scaroni speculated that
the Russians will not object to it because the proposed small
gas volume would not threaten Russia's energy interests in
that area. He added that Turkey,s participation would also
keep Russia from opposing the project as Russia sees
Turkey,s cooperation on South Stream as too important to
risk.


5. (C) Comment: This project may be Eni's attempt to present
itself as being concerned about EU energy diversification;
Eni realizes that some critics see the company as an ITALIAN
tool of Gazprom. Scaroni knows that Washington is not pleased
with Eni's support of Gazprom projects, and he also knows
that Eni is under scrutiny in Washington because of its Iran
activities. Scaroni may be seeking to soften our views of the
company: He told Post of this Eni gas-swap project during a
meeting with the Ambassador that was focused on our ongoing
Iran Sanctions Act review. We think Scaroni's supposed
desire to bring Turkmenistan gas to the West should be viewed
with skepticism; Eni is Gazprom's most important Western
European partner. Also Scaroni is talking about very small
amounts of gas. And, finally, it should be remembered that
Eni facilitated the Russian project (Blue Stream) that had
the effect of scuttling a mid-1990s effort to build a
Trans-Caspian pipeline, a project that truly would have
improved EU energy security. End Comment.
THORNE