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WikiLeaks : Azerbaijan: President Aliyev On Upcoming Gas

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  • WikiLeaks : Azerbaijan: President Aliyev On Upcoming Gas

    AZERBAIJAN: PRESIDENT ALIYEV ON UPCOMING GAS

    CableSearch.org

    This is not the original Wikileaks document! It's a cache, made on
    2010-12-16 20:10:10. For the original document check the original
    source: http://213.251.145.96/cable/2006/12/06BAKU1771.html ID
    06BAKU1771 SUBJECT AZERBAIJAN: PRESIDENT ALIYEV ON UPCOMING GAS DATE
    2006-12-05 15:03:00 CLASSIFICATION CONFIDENTIAL ORIGIN Embassy Baku
    TEXT Tuesday, 05 December 2006, 15:44 C O N F I D E N T I A L SECTION
    01 OF 03 BAKU 001771 SIPDIS SIPDIS DEPT FOR DAS BRYZA EO 12958 DECL:
    12/04/2016 TAGS ENRG, GA, PGOV, PREL, TU, AJ SUBJECT: AZERBAIJAN:
    PRESIDENT ALIYEV ON UPCOMING GAS TRILATERAL REF: BAKU 1720 Classified
    By: Ambassador Anne E. Derse, Reasons 1.4 (b,d) ¶1. (U) ACTION REQUEST:
    Please see Paragraph 10.

    ¶2. (C) SUMMARY: President Aliyev told the Ambassador on December 5
    that he expected the December 8 Trilateral meeting of Energy Ministers
    in Tbilisi to "clarify" whether Turkey was willing to help Georgia with
    its winter gas problems. He said Azerbaijan would host a subsequent
    December 14 meeting in Baku among Azerbaijan, Georgia and Turkey,
    plus BP and Statoil. Aliyev again blamed BP for linking commercial
    issues to the current gas problems, and reported that "nothing had
    changed" in Azerbaijan,s gas negotiations with Russia during Russia
    PM Fradkov,s visit to Baku. END SUMMARY.

    ¶3. (C) On December 5 the Ambassador met with President Aliyev and
    discussed both energy and press freedom issues (septel). Energyoff
    was notetaker.

    Russian PM Fradkov Visit Readout
    -------------------------------------------- ¶4. (C) Concerning
    the just concluded visit to Baku of Russian Prime Minister Mikhail
    Fradkov, Aliyev said that "nothing had changed" concerning the Gazprom
    offer of gas to Azerbaijan at 1.5 billion cubic meters (bcm) at USD
    230 per thousand cubic meters (mcm). Aliyev said that Russia knows
    Azerbaijan will not buy at this price, which would be more expensive
    than Azerbaijan's burning mazut in its power plants.

    Aliyev said that he did not even seek to raise the issue with Fradkov,
    but that Fradkov had broached it. Aliyev said that Fradkov contended
    that the Gazprom offer was not "anti-Azerbaijan," and was purely a
    commercial decision, but Aliyev added that Gazprom's sales of gas to
    Ukraine at USD 130 per mcm belies this claim. Aliyev said that Russia
    justifies its lower gas sales price to Armenia by its being Armenia's
    close ally and by purchase of the Iran-Armenia gas pipeline, by which,
    he said, Russia seeks to control strategic future gas export routes
    to Europe. Russia was trying to "circle the European gas market,"
    which also was influencing its negotiations with Belarus, but here
    too there has not been an agreement on sales price.

    ¶5. (C) Aliyev said that Fradkov also proposed that Russia could
    help Azerbaijan in transporting its gas to third countries, although
    Aliyev told the Ambassador his response was that he did not see how
    such 'help' would be possible. Fradkov told Aliyev that Russia was
    going to need more gas for domestic use, which would reduce volumes
    it could sell to Europe. Aliyev said that Russia was working with
    Algeria to form a gas monopoly.

    Gas Trilat ------------ ¶6. (C) The Ambassador said she knew that
    Aliyev had had a good discussion with DAS Bryza on energy issues
    in Minsk and with Georgian PM Noghaideli when he visited Baku on
    November 30, and that based on the latter meeting there was going
    to be a trilateral meeting of the Turkish, Georgian and Azerbaijani
    Energy Ministers in Tbilisi on December 8. Aliyev said Georgian and
    Azerbaijan shared a common strategic vision on energy issues, would be
    coordinating closely in this regard, and as such, during Noghaideli's
    December 4-14 visit to the United States he would be delivering an
    Azerbaijani message as well as a Georgian one (Comment: The Georgian
    Ambassador told the Ambassador on December 5 that in his US visit
    Georgian PM Noghaideli would ask Secretary Rice and Vice-President
    Cheney to "encourage" BP to help this winter). Aliyev said that
    he had expected the Turkish and Georgian governments to have had
    positive discussions prior to Noghaideli's November 30 visit to Baku
    but that this did not happen, and that the answer Georgia received
    from Turkey at that time concerning redistribution of Shah Deniz gas
    was negative, and contrary to the common understanding arrived at in
    July 2006 among the leaders of the three countries.

    BAKU 00001771 002 OF 003 Aliyev said he felt that "the Turkish
    approach was not sincere," and as such Azerbaijan and Georgia needed
    to coordinate tactics and strategy. At a recent high-level meeting
    of his government Aliyev said he stressed his commitment to the
    longer-term strategic project of delivering Caspian gas to Europe and
    that "Azerbaijan should not sacrifice its long-term energy strategy
    for day-to-day needs."

    Azerbaijan's strategic goal, which Aliyev said was currently more
    important for Europe than it was for Azerbaijan, was to enter European
    markets. Putin is saying that Azerbaijan and Kazakhstan cannot
    supply gas to Europe - "if we don't do it, we lose the battle." As
    such, Azerbaijan has put forward the best possible solution for the
    short-term gas crunch: some gas for Georgia, some for Turkey, some
    for Azerbaijan, and some for Greece.

    ¶7. (C) The Ambassador said that the Georgians have been led to
    believe that the Turkish government is going to be more positive in
    the December 8 Tbilisi meeting, although she could not confirm this
    assessment (Comment: the Georgian Ambassador told the Ambassador on
    December 5 that Georgia's Embassy in Ankara has reported that the
    Turkish Foreign Ministry is saying that Turkey is now ready to discuss
    redistributing its 2007 Shah Deniz gas volumes) . She said that DAS
    Bryza has suggested that after the December 8 trilateral, it might be
    useful to have another trilateral meeting on December 14 in Baku with
    the inclusion of BP and Statoil, and she asked the President for his
    opinion. Aliyev said that "we don't have time to wait," noting that
    the winter holidays were fast approaching. He said he approved the
    proposed December 14 meeting -- trilateral plus BP and Statoil -- and
    would be willing for Baku to host it. He added that he had wanted Baku
    to host the December 8 meeting, but deferred to the Georgian desire to
    have it in Tbilisi. He said USG involvement in the December 14 meeting
    would be useful. He said that the December 8 Tbilisi meeting would
    be very important as it would 'clarify' the Turkish position, i.e.

    whether they were willing to help, and that the December 14 meeting
    would be similarly important as it would clarify whether BP was
    willing to help.

    BP's Dangerous Game ---------------------------- ¶8. (C) Aliyev
    said that BP could deliver more associated gas from the ACG field to
    Azerbaijan for domestic use, but that it was linking its cooperation in
    this regard with its desire to extend its Production Sharing Agreement
    (PSA) with Azerbaijan to develop ACG deep gas.

    Aliyev said it was inappropriate for BP to link all of its issues such
    as PSA extension, ACG deep gas, transportation tariff agreements and
    others into one bundle; it also was inappropriate for BP to link the
    solution of those issues to Azerbaijan's "temporary troubles." He said
    that BP was using "mild blackmail" and argued that BP must instead
    act in good faith. Aliyev said that he had instructed his officials
    to tell BP that if it were not "supportive" with ACG associated gas,
    it would not get its way with PSA extension and ACG deep gas. "If BP
    won't give us more ACG associated gas, I have instructed our officials
    to tell them no PSA extensions or ACG deep gas," Aliyev underscored.

    He said that he did not want this to happen, since from an economic
    viewpoint both the AIOC Consortium and Azerbaijan would benefit from
    extending the PSA and for the Consortium being the ones to develop
    ACG deep gas. But it was not just Azerbaijan, but also Europe and
    Georgia who had a stake in this issue. Aliyev concluded by saying
    that if Turkey agreed to redistribute its 2007 Shah Deniz gas that
    "would almost be the way out," but that then Azerbaijan would still
    need BP support in both redistributing this Shah Deniz gas and also
    in giving Azerbaijan more ACG associated gas.

    ¶9. (C) The President also mused that "we could cut the gas supply
    to Turkey" if need be. The Ambassador pointed out that this would be
    an extreme measure with serious repercussions. She asked Aliyev if he
    knew the reasons for Turkish truculence concerning gas redistribution.

    He said he did not, but suspected it could be monetary, i.e. buying gas
    at USD 120 per mcm and selling it at USD 230. He also BAKU 00001771
    003 OF 003 conjectured that Turkey could be under serious pressure
    from Russia.

    ¶10. ACTION REQUEST: Ambassador will meet with BP Azerbaijan President
    Bill Schrader December 8. Department's guidance, particularly
    information on the message being delivered to BP officials
    in Washington, is requested. DERSE HEADER VZCZCXRO6781 OO RUEHAG
    RUEHDBU RUEHROV DE RUEHKB #1771/01 3391544 ZNY CCCCC ZZH O 051544Z
    DEC 06 FM AMEMBASSY BAKU TO RUEHC/SECSTATE WASHDC IMMEDIATE 1886 INFO
    RUCNCIS/CIS COLLECTIVE PRIORITY RUCNMEM/EU MEMBER STATES PRIORITY
    RUEHAK/AMEMBASSY ANKARA PRIORITY 1882 RUEHAH/AMEMBASSY ASHGABAT
    PRIORITY 0408 RUEHTA/AMEMBASSY ASTANA PRIORITY RUEHSI/AMEMBASSY TBILISI
    PRIORITY 1444 RUEHYE/AMEMBASSY YEREVAN PRIORITY 1217 RUEHIT/AMCONSUL
    ISTANBUL PRIORITY 0010 RUEKDIA/DIA WASHDC PRIORITY RUEAIIA/CIA
    WASHINGTON DC PRIORITY RHEHNSC/NSC WASHDC PRIORITY

    XTAGS: XTAGENRG, XTAGGA, XTAGPGOV, XTAGPREL, XTAGTU, XTAGAJ 06BAKU1771
    ADDED 2010-12-15 21:09:00 STAMP 2010-12-16 20:10:10 VOTE_POINTS 0
    VOTE_COUNT 0 VOTE_RATING 0 PRIORITY OO TWEETS 0 MANUAL N ISNEW Y




    From: A. Papazian
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