GEORGIAN PM SAYS TURKMEN INTERESTED IN WESTERN

C O N F I D E N T I A L SECTION 01 OF 02 TBILISI 000849

SIPDIS

E.O. 12958: DECL: 05/01/2019
TAGS: ENRG ECON PGOV PREL RU AZ GG
SUBJECT: GEORGIAN PM SAYS TURKMEN INTERESTED IN WESTERN
INVESTMENT, LNG

REF: TBILISI 788

Classified By: Ambassador John F. Tefft for reasons 1.4 (b) and (d).

1.(C) SUMMARY: Prime Minister Nika Gilauri regaled the
Ambassador April 30 with a readout of his April 22 trip to
Turkmenistan. Gilauri said that while he found Ashgabat
quite surreal, the trip was successful and he sees the
potential for cooperation with Turkmenistan to develop
offshore natural gas deposits. He said that Turkmen
President Berdimukhamedov was quite welcoming and appeared
annoyed with the Russians. The Turkmen leader asked Gilauri
to tell the U.S. that offshore Turkmen gas deposits were up
for grabs and that he was interested in attracting western
investment. Berdimukhamedov stressed that pipelines are
susceptible to geopolitical pressures and that he would far
prefer to see liquefied natural gas (LNG) structures
developed that would allow Turkmen gas to be fed into the
existing South Caucasus Pipeline (SCP). We would appreicate
the Department's reaction to Gilauri's presentation. END
SUMMARY.
A WARM WELCOME TO OZ . . . .

2. (C) Gilauri started the meeting by describing Ashgabat as
a &cartoon8 city. He said that visiting Turkmenistan was
unlike anything he had ever experienced before, and went on
to highlight the surreal nature of the first Turkmenistan
Energy Summit. The PM found the orchestrated clapping for
Turkmen President Berdimukhamedov "awe-inspiring" and
entertaining. He said that the Turkmen president was very
welcoming and video footage of the two meeting and shaking
hands was played repeatedly on Turkmen television. In a
definite poke at the Russians, Gilauri said Berdimukhamedov
made a point of asking Gilauri, in front of the cameras, to
please say hello to his best friend Misha Saakashvili.
TIMING RIGHT FOR GAS DISCUSSIONS

3. (C) Gilauri said the timing of his trip to Ashgabat was
good, as Berdimukhamedov was clearly frustrated at the
country's inability to export gas for the last ten days due
to pipeline problems devised by the Russians. Gilauri said
that he approached the Turkmen president in a straight
forward manner, and immediately got to the reason for his
visit - how Georgia could help Turkmenistan get gas to the
West. Gilauri said that Berdimukhamedov seemed to appreciate
his directness and responded in a similar manner.
PIPELINES ARE TOO RISKY, LET'S DO LNG

4. (C) The Turkmen president said in the past he would have
advocated building consensus between countries in the region
including Iran. He said however that now he realizes this
would be futile, and that any pipeline would be at risk,
because once it was built, Iran, Russia and Azerbaijan all
might attempt to block the line to influence delineation
discussions. Berdimukhamedov said he sees LNG as the
solution to geopolitical wrangling. He told Gilauri that
Georgia or the West could have as much off-shore gas as they
wanted, but it should be taken in the form of liquefied
natural gas (LNG) and not through a pipeline. He stressed,
however, that onshore deposits belonged to the Turkmen people
and were not available. The discussion then turned to
visions of developing an LNG system. The two agreed that LNG
terminals would need to be built on both the Turkmen and
Azerbaijani sides of the Caspian probably at a 30 BCM
capacity. In Azerbaijan LNG would be re-gasified and
transported out through the existing South Caucasus Pipeline
Qtransported out through the existing South Caucasus Pipeline
(SCP). While both Berdimukhamedov and Gilauri acknowledged
that developing the LNG structure would be more expensive
than a pipeline, they stressed it would be less susceptible
to political whims.
TELL THE U.S. OFFSHORE RIGHTS ARE UP FOR GRABS

5. (C) Berdimukhamedov asked Gilauri to communicate to the
U.S. that Turkmenistan wants foreign investment and that they
are ready to give offshore rights to interested American
companies. He asked Gilauri to tell the U.S. to encourage
American companies to look at Turkmenistan.
NEW ARCHITECTURE FOR CASPIAN GAS, RUSSIANS MAYBE NOT NECESSARY

6. (C) Berdimukhamedov told Gilauri that Turkmenistan had
decided to hold its first ever Energy Summit with the
intention of developing a new strategic system of
transporting natural gas from the region. Given
Berdimukhamedov,s state of mind, Gilauri clearly thought
this meant developing a new transportation system that would
neutralize Russian influence. The PM added that when the
general director of GazProm visited Turkmenistan several
months ago, the Turkmen president refused to meet him. The
PM said he thinks Turkmen discussions with the Chinese are
making them more confident in their dealings with the
Russians. Gilauri said three factors motivated the Russians
to blow up Turkmen natural gas pipelines: first, the energy
conference, second, the falling demand for natural gas now in

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Europe and a Russian lak of capital to make promised gas
purchases from Turkmenistan, and third, the Chinese pipeline.
NOW ON TO BAKU

7. (C) Gilauri said that he plans to go to Azerbaijan in the
near future to discuss the possibility of forming a joint
Georgian-Azerbaijani company to look at developing and
exporting Turkmen gas (reftel). He said he discussed this
idea with the Turkmen, who despite tensions over delineation
issues, said they would support such a company. Gilauri said
Azerbaijani support for this idea was of course critical and
he hoped his trip could convince them of the need to explore
new ways to develop Turkmen gas.
COMMENT: USE TURKMEN CONCERNS TO DIVERSIFY CASPIAN GAS

8. (C) Following the recent signing of an MOU between the
Azerbaijani state gas company SOCAR and Russia's GazProm, it
appears the Georgians have decided to take a more active role
in helping to diversify Caspian gas. This is clearly in
their interest both geopolitically and financially. If
Caspian gas transits Georgia to the west, the country stands
to benefit financially from transit fees. The development of
Turkmen gas would also help increase Georgian energy security
by further diversifying gas supply beyond Russian and
Azerbaijan. The Georgians appear nonplused by Turkmen
efforts to use them to irritate the Russians, as
Berdimukhamedov did when he greeted Gilauri with a public
display of support for Georgian President Saakashvili. We
would appreciate the Department's reaction to Gilauri's
presentation, so that we can help steer the Georgian PM in
the right direction.
TEFFT