TURKMENISTAN: BRITISH DIPLOMATS TALK CENTRAL ASIA

C O N F I D E N T I A L ASHGABAT 000130

SIPDIS

STATE FOR SCA/CEN; EEB;
ENERGY FOR EKIMOFF/BURPOE/COHEN
COMMERCE FOR DSTARKS/EHOUSE

E.O. 12958: DECL: 01/27/2020
TAGS: EPET ECON PGOV EINV BTIO KZ UK TX
SUBJECT: TURKMENISTAN: BRITISH DIPLOMATS TALK CENTRAL ASIA
ENERGY

Classified By: Charge Sylvia Reed Curran for reasons 1.4 (b) and (d).


1. (C) On January 26, econoff met with the new British
Ambassador to Turkmenistan Keith Allen and the British
Regional Energy Officer Martin Child. The British Ambassador
stated that he had brought up the UK's increased interest in
securing natural gas for Europe at his first meeting with
President Berdimuhamedov on January 20. He also noted that
British Minister of State for Energy and Climate Change Lord
Hunt is scheduled to visit Turkmenistan and Kazakhstan in
March 1-2, a visit that the Turkmen have reportedly lauded.
Ambassador Allen said that although he had been in the
country for about a week, he quickly realized that the
Turkmen President viewed high level visits as the most
appropriate fora for bilateral deliverables, such as the
signing of energy deals. He was hopeful that British energy
companies in the country would benefit from future high-level
visits. (NOTE: British Petroleum has an office in Ashgabat,
but has been unable to strike an energy deal to date, to a
large extent because the company's work near the disputed
area of the Caspian. END NOTE.)


2. (C) The British Regional Energy Officer, posted in Astana,
was in Turkmenistan for his regular quarterly visit. He
opined that Turkmenistan was in many ways trying to follow
Kazakhstan's energy model by expanding its hydrocarbon
clients and routes. As an example, he cited Turkmenistan's
opening of its energy markets to the Chinese. Moreover, he
added both Central Asian countries have taken a lot of
Chinese cash to develop their energy sectors. He asserted
that the Kazakhs were starting to express buyer's remorse
with the Chinese, especially when the Kazakhs are reminded
that the Chinese own 27 percent of KazakhOil. The Turkmen,
he suggested, seem to be less affected by the Chinese at the
moment. He cautioned, however, that if the Turkmen continued
to take multi-billion dollar loans from the Chinese and
continued to offer them lucrative hydrocarbon development
deals, Turkmenistan would be well on its way to "Chinese
commercial colonization."


3. (C) Both British diplomats also discussed the
Turkmen-Russian energy relationship since the two sides
reached a gas agreement for 2010. They supposed that Russia
would most likely purchase around 10 billion cubic meters
(bcm) of gas from Turkmenistan, but did not need the gas.
They were confident that Russia agreed to buy 10 bcm in order
to keep its hopes for the Littoral or Pre-Caspian pipeline
alive. They added that Russia was "painfully" watching its
energy domination over Central Asia dissipate, and it had no
choice but to buy gas from Turkmenistan and Uzbekistan, even
if it was not economically favorable to do so. They posited
that Russia would pay between $180-$195 per thousand cubic
meters of Turkmen gas for 2010, which was still much more
than Russia could afford. Since Turkmenistan now has China,
Iran, and Russia as gas customers for 2010, it was less
concerned that Russia had agreed to buy such low volumes of
gas, they added.


4. (C) COMMENT: British energy companies in Turkmenistan have
reported little success in reaching deals with the Turkmen.
At the same time, the new British Ambassador has made
pressing London for more high level visits a priority. In
addition to gaining business for British firms, the new
Ambassador plans on reiterating the importance of getting
Turkmen gas to Europe. Nevertheless, he admitted he was
unsure how he would get any Turkmen gas to Europe, given the
absence of a trans-Caspian pipeline. END COMMENT.
CURRAN