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Cablegate: Kazakhstan: U.S. Deputy Secretary of Energy Discusses

VZCZCXRO5808
OO RUEHIK
DE RUEHTA #1902/01 2940922
ZNR UUUUU ZZH
O 210922Z OCT 09
FM AMEMBASSY ASTANA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 6679
INFO RUCNCIS/CIS COLLECTIVE 2065
RUCNCLS/ALL SOUTH AND CENTRAL ASIA COLLECTIVE
RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUEHBJ/AMEMBASSY BEIJING 1436
RUEHKO/AMEMBASSY TOKYO 2136
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 1625
RUEKJCS/SECDEF WASHDC 1487
RUEKJCS/JOINT STAFF WASHDC
RHMFIUU/CDR USCENTCOM MACDILL AFB FL
RUEHUNV/USMISSION UNVIE VIENNA 0092

UNCLAS SECTION 01 OF 03 ASTANA 001902

SENSITIVE
SIPDIS

STATE FOR SCA/CEN, EUR/RUS, EUR/CARC, ISN, EEB

E.O. 12958: N/A
TAGS: PARM PGOV PREL ECON MNUC SOCI KNNP AJ RS TX KZ
SUBJECT: KAZAKHSTAN: U.S. DEPUTY SECRETARY OF ENERGY DISCUSSES
NUCLEAR FUEL, OIL, AND, JET-SKI RACING WITH GOVERNOR OF MANGYSTAU

ASTANA 00001902 001.2 OF 003


REFTEL: ASTANA 1886

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

2. (SBU) SUMMARY: On October 6, U.S. Deputy Secretary of Energy
Daniel Poneman met Mangystau Oblast Akim (governor) Krymbek
Kusherbayev to discuss U.S.-Kazakhstani energy and non-proliferation
projects in western Kazakhstan. Poneman thanked Kusherbayev for his
support and said the United States attaches great importance to
securing the 300 metric tons of weapons-grade spent-fuel from the
BN-350 reactor. The Akim reaffirmed his commitment to
non-proliferation cooperation and described his priorities in
Mangystau Oblast. Kusherbayev also related an anecdote from the
recent Caspian Sea Summit, regaling Poneman with a description of
the presidents on jet skis. Even though oil pipelines under the
Caspian are technologically feasible, Kusherbayev said their
benefits must be balanced with the risk of environmental damage to
the Caspian. The Akim, a former Ambassador to Moscow, was amiable
and relaxed throughout the conversation. END SUMMARY.

AKIM AGREES COOPERATION ON BN-350 IS A BILATERAL SUCCESS

3. (SBU) Poneman told the Akim his tour of the BN-350 reactor
(reftel) impressed on him the region's scientific accomplishments,
strong partnership with the United States, and potential for future
energy development. Poneman reiterated that Presidents Obama and
Nazarbayev have consistently said that countering the proliferation
of weapons of mass destruction is a key priority for their
governments and a cornerstone of bilateral cooperation. The Akim
and Poneman agreed that the decade-long project, one of the last
steps in decommissioning the BN-350 reactor, is a major
non-proliferation milestone. They also reaffirmed their mutual
support for non-proliferation and the BN-350 project.

THE GOVERNOR TOUTS MANGYSTAU'S COMPETITIVE ADVANTAGES

4. (SBU) Kusherbayev told Poneman that Mangystau is one of
Kazakhstan's wealthiest provinces, with a national per capita GDP of
$25,000. (NOTE: According to the Minister of Energy and Mineral
Resources in his address to the Kazakhstan International Oil and Gas
Exposition (KIOGE) Conference on October 7, the national per capita
GDP is $8,000. END NOTE.) According to Kusherbayev, Mangystau
Oblast possesses the potential to develop competitive advantages in
natural resources, transportation, and tourism.

FROM HYDROCARBONS TO URANIUM

5. (SBU) In relation to natural resources, the Akim -- a former
academic -- told Poneman proudly that Mangystau possesses all the
elements of the periodic table. Kusherbayev said Mangystau, which
recently opened for development one of its oil and gas fields, will
increase its exports from approximately 29 to 90 million tons of oil
over the next few years. Kusherbayev emphasized that Conoco
Phillips, Kazakhstan's national oil company, and the United Arab
Emirates's Magdala oil company play active roles in Mangystau's
economy. Due to its location in deep-water portions of the Caspian,
Kusherbayev expects Mangystau to become an oil-transport hub --
similar to Qatar -- and a service center for building and servicing
off-shore oil platforms, including fields located within the
territory of its neighbor and competitor, Atyrau Oblast.
Kusherbayev also predicted oil shipping volumes in the Caspian Sea
region will increase to 150 million tons per year.

THE NEW SILK ROAD

6. (SBU) Kusherbayev, whose staff lobbied intensively for Poneman
to meet the Akim in his office rather than at the airport or the
BN-350 reactor, described the region's plans to develop road, sea,
and rail infrastructure. "In the past, the Silk Road passed through
Mangystau, and provided a lot of revenue for our ancestors,"
Kusherbayev told Poneman. The Akim said the region is building a
railroad to link Aktau to Turkmenistan, from which point rail lines
already exist to carry goods to Iran and the Persian Gulf.

ASTANA 00001902 002.2 OF 003


According to Kusherbayev, the potential revenue from transportation
of Chinese goods passing through Mangystau en-route to Western
Europe and the Persian Gulf could equal its earnings from oil and
gas.

PRESIDENTS ON JET SKIS

7. (SBU) Kusherbayev said Mangystau Oblast is working on a project
with Arab investors, mostly Kuwaitis, to develop a first-class
tourist resort area called Kenderlik, located south of Aktau along
the Caspian seacoast. Kusherbayev said the resort will have 5-star
hotels, golf courses, and possibly even casinos. "We would like to
make Kenderlik the Las Vegas for countries of the Middle East,"
Kusherbayev told Poneman. To emphasize Mangystau's tourism
potential, Kusherbayev recounted that in mid-September the
presidents of Kazakhstan, the Russian Federation, Azerbaijan, and
Turkmenistan had gathered for an informal Caspian Sea Summit in
Aktau. "I personally created a six-kilometer-long jet-ski race for
the four Presidents along the Caspian Sea near Kenderlik,"
Kusherbayev told Poneman, smiling. Kusherbayev added, "The
presidential security forces were so nervous, but the presidents had
a wonderful time!" Kusherbayev said that President Nazarbayev
craftily allowed Medvedev to win just at the end of the race. "Our
President is very intelligent," Kusherbayev laughed.

EARTH, SEA, AND SKY

8. (SBU) Kusherbayev said Mangystau is working on a program called
"earth, sea, and sky" that will coordinate its development of
natural resources, transportation, and tourism. "Earth relates to
hydrocarbon resources, sea relates to our development of our marine
transportation and tourism resources, but by sky, we mean God,
without whose help nothing would be possible," Kusherbayev
explained. The Akim said Aktau city, as the center of the plan, is
also growing rapidly, with an entirely new Aktau city under
construction in cooperation with the United Arab Emirates. Because
the demand for electricity more than doubled in the last two years,
the government will build a new nuclear power plant on the BN-350
reactor site. In response to a question about how he plans to
maintain rational growth within the expansion of an oil-driven
economy, Kusherbayev explained that the program's architects from
the United Arab Emirates are actually top-notch architects from
Boston, and they plan to take lessons-learned from Abu Dhabi into
account. Kusherbayev said his region is also interested in
developing its shipbuilding industry, especially in relation to
larger, oil-carrying vessels.

THE AMERICAN WAY?

9. (SBU) Pipelines under the Caspian for oil transport are feasible
in theory, Kusherbayev told Poneman, but he cautioned, "I will not
risk the unique marine environment of the Caspian, with its caviar
and sturgeon resources. If we cannot find a safe ecological way to
construct pipelines, we should follow the American way -- close and
preserve the resource area." Kusherbayev told Poneman that during
his recent visit to Baku as a member of President Nazarbayev's
delegation, the "oily and disgusting" state of the Caspian coast
distressed him. "I do not want that future for my region and
country. Oil and gas are the main assets of our economy, but they
should not lower the standard of living of our people," the Akim
told Poneman.

AN AUTOGRAPHED GIFT

10. (SBU) Kusherbayev closed the meeting by urging Poneman to visit
Kenderlik on his next trip to Kazakhstan. "If you don't like jet
skis, we can take you scuba-diving," he offered. The urbane,
sophisticated Akim then presented copies of a
beautifully-illustrated several hundred page academic work on
Mangystau. The Akim happily autographed for his visitors the work,
which he had co-authored during his academic career. "I came here,
and fell in love with this beautiful area, which is why I am so
happy to be able to work here," Kusherbayev explained.

ASTANA 00001902 003.2 OF 003

11. (U) Deputy Secretary Poneman has cleared on this cable.

HOAGLAND

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