Cablegate: Turkmenistan: Iran's Recent Caspian-Energy Rhetoric

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SUBJECT: TURKMENISTAN: IRAN'S RECENT CASPIAN-ENERGY RHETORIC

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

2. (SBU) A number of international media outlets recently cited
Reza Kasaeizadeh, Managing Director of the National Iranian Gas
Export Company, as stating Iran would prevent Turkmenistan from
participating in any projects aimed at transporting Turkmen gas via
the Caspian Sea. Although Kasaeizadeh's words cannot be considered
an official government statement, they still reflect Iran's position
on the issue of energy export routes from Central Asia. The only
westbound energy export routes from Central Asia that Iran does not
oppose are routes that would run through its own territory. Iran is
extremely interested in becoming a transit country for gas exports,
given Iran's current economic and political isolation. Kasaeizadeh
did not mention, however, how Iran would block trans-Caspian
projects.

3. (SBU) Theoretically, Iran could use the unsettled boundary
status of the Caspian Sea as an excuse to impede a trans-Caspian
pipeline project by insisting that no international projects should
be implemented without the agreement of all littoral states. Iran's
position on the Caspian issue is that the Caspian seabed should be
divided equally among the littoral states so that each country gets
a 20% share. This position is unacceptable to the rest of the
littoral states and makes it difficult to foresee settlement of the
Caspian delimitation issue in the near future. Iran could also put
economic pressure on Turkmenistan by stopping imports of Turkmen
gas, cutting oil swap operations, and prohibiting transportation of
Turkmenistan-bound goods across its territory. Experts assert that
potential economic losses that Turkmenistan would suffer from such
measures would be significantly lower than the economic benefits
that Turkmenistan would reap from a trans-Caspian pipeline.

4. (SBU) COMMENT: Recent Iranian statements regarding its ability
to prevent Turkmenistan from pursuing Caspian projects seem to be
just that...empty statements. In January 2008, Turkmenistan cut gas
supplies to Iran, citing technical difficulties. Iran reportedly
tried to strong-arm Turkmenistan into resuming supplies but ended up
paying the Turkmen more for gas. As a result, experts believe that
Iran's influence over Turkmenistan, especially when it comes to
energy issues, is still very limited. END COMMENT.

CURRAN

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