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Cablegate: Kazakhstan: Caspian Sea Summit

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DE RUEHTA #1539/01 2611026
ZNR UUUUU ZZH
O 181026Z SEP 09
FM AMEMBASSY ASTANA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 6235
INFO RUCNCIS/CIS COLLECTIVE 1942
RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUCNCLS/ALL SOUTH AND CENTRAL ASIA COLLECTIVE
RUEHBJ/AMEMBASSY BEIJING 1311
RUEHKO/AMEMBASSY TOKYO 2010
RUEHUL/AMEMBASSY SEOUL 0964
RHMFISS/DEPT OF ENERGY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEAIIA/CIA WASHDC
RHEFAAA/DIA WASHDC
RHEHNSC/NSC WASHDC 1497
RUEKJCS/SECDEF WASHDC 1378
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RHMFIUU/CDR USCENTCOM MACDILL AFB FL
RUEHAST/USOFFICE ALMATY 1865

UNCLAS SECTION 01 OF 03 ASTANA 001539

SENSITIVE
SIPDIS

STATE FOR SCA/CEN, EUR/CARC, EEB/ESC, EUR/RUS
STATE PLEASE PASS TO USTDA

E.O. 12958: N/A
TAGS: PGOV PREL ECON EPET EINV IR RS KZ
SUBJECT: KAZAKHSTAN: CASPIAN SEA SUMMIT

ASTANA 00001539 001.2 OF 003


1. (U) Sensitive but unclassified. Not for public Internet.

2. (SBU) SUMMARY: On September 12, President Nazarbayev hosted the
presidents of Russia, Azerbaijan, and Turkmenistan at a private
resort in Kenderliy, south of the port city of Aktau in western
Kazakhstan. According to press reports and interviews with
government officials and resident diplomats, the presidents
discussed economic, energy, environmental, and boundary issues. No
documents were signed and no declaration was issued following the
informal summit. The presidents stressed that they had not
conferred on the delimitation of the Caspian Sea, and would not do
so until all five Caspian littoral states, including Iran, have an
opportunity to discuss the issue, possibly in Baku later this year.
The meeting supposedly allowed Nazarbayev to play the role of
gracious host and honest broker against the backdrop of tension
between Turkmenistan and Russia over gas shipments, and between
Turkmenistan and Azerbaijan over boundary issues. It also
underscored Russia's continuing desire to influence economic and
energy policy in the Caspian, particularly regarding the
transportation of oil and gas. END SUMMARY.

AKTAU ATMOSPHERICS

3. (SBU) The September 12 informal summit brought together the
presidents of Kazakhstan, Russia, Azerbaijan, and Turkmenistan in
Kazakhstan for the first time, and the port city of Aktau was well
dressed for the occasion. Several local residents told Energy
Officer on September 13 that before the presidents' arrival, all of
the city's roads had been resurfaced, new landscaping was installed,
and dozens of billboards were erected to highlight Nazarbayev's
steady leadership, promote the capital city of Astana, and welcome
the distinguished visitors. Nazarbayev also opened a new airport
terminal and trading center during his visit. For security reasons,
the port of Aktau was closed for five days, while empty oil tankers
waited offshore, unable to load their cargo. An American oil
company executive based in Aktau told Energy Officer on September 13
that the local government commandeered vehicles -- and their drivers
-- from international companies working in Aktau to support the
summit. "This was not a polite request," he said. "They basically
ordered us to give up a couple cars for ten days, and they had our
drivers on call the whole time, 24/7."

MEDVEDEV'S SPEECH SETS THE STAGE

4. (SBU) Russian President Medvedev set the stage for the Caspian
Sea Summit with his August 17 speech in Astrakhan. In the speech,
Medvedev acknowledged "the Caspian Sea's mineral resources enormous
significance" to global energy security, but said Russia's main goal
was "to preserve the Caspian Sea for future generations, not
allowing it to be spoiled" by oil and gas exploration. Medvedev
also called for "active talks" to define the legal status of the
Caspian Sea, announced Russia's interest in developing Caspian
maritime transportation infrastructure, endorsed the creation of the
Caspian Sea Economic Cooperation Organization, and confirmed
Russia's strong desire to convene a meeting of experts in Baku "to
develop a pentalateral agreement on security cooperation in the
Caspian Sea." The next day, the office of President Nazarbayev
announced that Kazakhstan would host the leaders of Russia,
Azerbaijan, and Turkmenistan at Kenderliy. The informal summit was
on, and diplomats across the region hurriedly began to prepare their
principals. During a September 10 reception in Astana, a Russian
Embassy Political Officer told PolOff that his Embassy was
essentially empty, with most staff in Aktau to prepare for the
Caspian Sea Summit. The Russian Embassy also suspended
non-emergency consular services, due to the deployment of the
Consular Officer to Aktau.

HIGH-STAKES GAS GAMES AT ORENBURG

5. (SBU) On September 11, on the eve of the Caspian Sea Summit,
Russian President Medvedev met President Nazarbayev in Orenburg for
the sixth annual Russia-Kazakhstan Interregional Cooperation Forum.

ASTANA 00001539 002.2 OF 003


According to press reports, Medvedev and Nazarbayev discussed border
security, immigration, and energy cooperation. Specifically, they
spoke about oil and gas exploration in Kazakhstan, the
transportation of oil and gas via Russia, and expansion of the
combined heat and power plant Ekibastuz-2 in eastern Kazakhstan. On
September 10, Todd Levy, General Director of Tengizchevroil (TCO),
called Energy Officer to say that Russia had suddenly stopped
receiving natural gas exports from Kazakhstan. As a result, TCO
reduced its production of oil at Tengiz, and considered flaring
natural gas far in excess of agreed-upon limits. Levy said that if
gas flows to Russia did not resume quickly, TCO would have to
severely curtail production, which could cost the company up to $2
billion in lost revenue in 2009. Levy flew to Orenburg and raised
the issue with Minister of Energy and Minister Resources Sauat
Mynbayev, who discussed it with Gazprom CEO Alexei Miller.
According to Levy, on September 11, Miller agreed to allow dry gas
shipments from TCO to Russia to resume for six days, during which
negotiations would continue on a long-term sales contract. (NOTE:
TCO was expected to export up to five billion cubic meters of gas to
Russia in 2009, through a 50-50 joint venture between KazRosGaz and
Invest Gas Limited. TCO has not received confirmation that Invest
Gas Limited has a permit for transportation via Russia. END NOTE).

WHAT WAS DISCUSSED AT AKTAU?

6. (SBU) Reports of what the presidents discussed and agreed during
their informal summit are sketchy and speculative. On August 21,
Campbell Keir, Country Manager for Shell Kazakhstan, told the
Ambassador that he and other international energy executives had
been summoned to Aktau to brief Nazarbayev on energy issues before
the Caspian Sea Summit. However, days before the summit, Nazarbayev
abruptly postponed the energy briefing until the end of September,
leading Keir and others to speculate that the presidents would not
be discussing oil and gas issues in great detail. Keir noted that
the four presidents have much to talk about in addition to
delimitation and oil transportation, including vessel flagging,
sturgeon conservation, oil spill response, and leaking sunken ships
in the Caspian.

LIMITED PRESS COVERAGE

7. (SBU) On September 12, the local newspaper in Aktau, "Mangistau
Ogniy" (Fires of Mangistau), quoted Nazarbayev saying that "global
and strategic issues" would not be discussed at the summit, since
these would require the presence of all five Caspian littoral
states, including Iran. "Nevertheless," said Nazarbayev, "our four
countries have something to talk about" in an informal and relaxed
setting. According to the article, Russian President Medvedev said,
"although our economies are showing signs of growth, we should not
become complacent. We all need to reconstruct our financial
systems, and discuss solutions to achieve economic growth." Azeri
President Aliyev confirmed that Azerbaijan would host the next
Caspian summit in Baku and emphasized that all five Caspian states
will be invited "to discuss global issues and take concrete
decisions" about the status of the Caspian Sea. (NOTE: An
accompanying photograph of the four presidents showed Medvedev and
Nazarbayev smiling broadly and standing shoulder to shoulder, while
Aliyev and Berdimukhamedov flank them awkwardly, some distance away.
The paper also published full-page profiles of Kazakhstan's
relations with Russia ("Friendship Forever"), Azerbaijan ("Country
of Fire"), and Turkmenistan ("The Dialogue Continues"). END NOTE).

EVEN INSIDERS WERE ON THE OUTSIDE LOOKING IN

8. (SBU) On September 15, a senior political advisor to the
governor of Mangistau oblast told the Ambassador that the Caspian
Sea Summit was poorly organized and "improvised." He said the
agenda was "not well prepared" and confirmed that no documents were
signed during the Summit. He also said that President Nazarbayev
traveled to Turkmenbashi, Turkmenistan, on September 13 with Russian
President Medvedev. An Azeri diplomat in Astana told Energy Officer
on September 15 that, while he had no first-hand knowledge of what

ASTANA 00001539 003.2 OF 003


was discussed at the summit, he understood that the presidents
discussed oil and gas transportation, as well as the delimitation of
the Caspian Sea. He speculated that the presidents wanted to
"define a common position" on the issue, before all five Caspian Sea
littoral states convene in Baku, "later this year."

IRAN IRATE

9. (SBU) On September 9, in a meeting with Kazakhstan's new
ambassador to Iran, Iranian Foreign Minister Manuchehr Mottaki said
that the informal Caspian Sea Summit "runs contrary to Iran's
national interests." According to wire reports, he said the meeting
"violates previous agreements, in which the five Caspian littoral
states came to the understanding that any decision on the waterway
should be made with the participation of all its neighboring
countries." Following the summit, the presidents of Russia,
Kazakhstan, Azerbaijan, and Turkmenistan all issued similar
statements, confirming that the status of the Caspian Sea could only
be determined with the presence and participation of all five
Caspian littoral countries. According to Interfax, Medvedev said,
"I believe that resolution of the Caspian issue requires serious
discussion among all of the states that border the Caspian." He
added that such a discussion would take place in the near future, in
Baku.

10. (SBU) COMMENT: Hosting the summit showed Kazakhstan's
interest, desire, and willingness to play the role of facilitator,
honest broker, and balancer of interests among the other countries
in the region. The summit also revealed Russia's continued desire
to influence the policies of the other former Soviet states in the
region, in order to maintain Russian control over the transportation
of oil and gas from the Caspian. We have no way of knowing if
Russia used the summit to exert direct pressure on the other
countries to cease specific projects such as the Kazakhstan Caspian
Transportation System, but it the summit did provide Medvedev an
opportunity, in a relaxed setting "among friends," to lobby for
increased oil and gas shipments through Russia. END COMMENT.

HOAGLAND

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