VZCZCXRO4255
RR RUEHBW RUEHIK RUEHPOD RUEHYG
DE RUEHNT #0475 1130745
ZNR UUUUU ZZH
R 220745Z APR 08
FM AMEMBASSY TASHKENT
TO RUEHC/SECSTATE WASHDC 9545
INFO RUEHTA/AMEMBASSY ASTANA 0127
RUEHAH/AMEMBASSY ASHGABAT 3914
RUEHBJ/AMEMBASSY BEIJING 1080
RUEHEK/AMEMBASSY BISHKEK 4529
RUEHDBU/AMEMBASSY DUSHANBE 0407
RUEHBUL/AMEMBASSY KABUL 2397
RUEHLM/AMEMBASSY COLOMBO 0396
RUEHNE/AMEMBASSY NEW DELHI 1068
RUEHKT/AMEMBASSY KATHMANDU 0435
RUEHIL/AMEMBASSY ISLAMABAD 4123
RUEHKA/AMEMBASSY DHAKA 0351
RUEHMO/AMEMBASSY MOSCOW 7382
RUEKJCS/SECDEF WASHDC
RHEHNSC/NSC WASHDC
RUEAIIA/CIA WASHDC
RHEFDIA/DIA WASHDC
RUEHVEN/USMISSION USOSCE 2450
RUEHZG/NATO EU COLLECTIVE

UNCLAS TASHKENT 000475 
 
SIPDIS 
 
SIPDIS 
 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: ENRG ECON ETRD PREL UZ
SUBJECT: UZBEKS SIGN ON TO TURKMENISTAN-CHINA GAS PIPELINE 
 
Ref: Ashgabat 457 
 
¶1. (SBU) Summary: Uzbekistan's state oil and gas monopoly 
Uzbekneftigaz, has announced that Uzbekistan agreed on April 11 to a 
Chinese proposal for construction of the Turkmenistan-China natural 
gas pipeline (also known as the Trans-Asia pipeline), which will 
transit Uzbekistan.  The Uzbeks will spend an estimated 1.5 billion 
USD in upgrades to existing east-west infrastructure as part of the 
deal.  Construction is anticipated to begin by the end of 2008, with 
the first 17 billion cubic meters (bcm) of Turkmen gas scheduled for 
delivery in 2009.  Initial capacity of the line will be 30 bcm per 
year, with a possibility of 40 bcm with subsequent improvements. 
End summary. 
 
¶2. (SBU) In December 2007, Chinese oil and gas companies Petrochina 
and China National Oil and Gas Exploration and Development Corp. 
(CNODC) announced plans to invest USD 1.08 billion each in the 
development of a new natural gas pipeline from Turkmenistan to 
China.  Initial capacity of the pipeline was/is 30 bcm per year with 
possible further extension to 40 bcm per year.  The pipeline deal 
has been in the works for several years.  The Turkmen first 
announced in 2007 that initial deliveries might begin as early as 
¶2009.  The deal came closer to reality in August 2007, when the 
leaders of Kazakhstan and China signed an agreement for construction 
of the Kazakh portion of the pipeline.  While the pipeline could 
theoretically have been routed around Uzbekistan, the distance and 
cost would have been significantly greater. 
 
¶3. (SBU) The 1,818 km pipeline is to begin in Turkmenistan's Gedaim 
field along the Uzbek border and run 188 km to Uzbekistan.  The 
Uzbek portion will be 525 km and will involve roughly 1.5 billion 
USD in upgrades to existing Uzbek pipelines and infrastructure.  The 
Kazakh portion is to cover 1,293 km and run to the Chinese border. 
 
 
¶4. (SBU) The estimated cost of the project is USD 7.3 billion. 
Petrochina announced in December 2007 that the deal would involve an 
unspecified capital injection into partially-owned subsidiary CNPC 
Exploration and Development Co. Ltd. (CNPC E&D) and a 50-50 joint 
venture arrangement between Petrochina and CNODC.  CNPC E&D has 
established a wholly owned subsidiary, Trans-Asia Gas Pipeline Co. 
Ltd., for implementation of the project and had previously announced 
plans to form separate joint ventures with state oil and gas 
companies in Kazakhstan and Uzbekistan.  Kazakhstan, according to 
Uzbek media reports, had proposed in September 2007 that the 
participating nations establish a ministerial-level Coordination 
Council to handle the technical aspects of planning, design and 
construction.  Post has no further information on the state of play 
of these various plans and proposals. 
 
¶5. (SBU) Reftel reports that Gazprom-owned Stroitransgas has 
contracted to build the Turkmen sector of the pipeline.  This adds a 
twist, and we would welcome further input from experts in Washington 
and elsewhere.  As we read the pipeline maps, the Turkmen spur would 
flow into the existing Uzbek pipeline at a point where it could then 
flow either northward, to Russia, or eastward, per plan. 
 
Comment 
------- 
 
¶6. (SBU) The Uzbeks' willingness to commit to 1.5 billion USD 
signifies a seriousness of purpose here.  That is good news, as the 
Uzbeks have a tendency to play the holdout and the spoiler.  The 
project could still face technical hurdles upgrading infrastructure 
along the portions of the Uzbek pipelines feeding the capital, 
Tashkent, and other major urban areas. 
 
¶7. (SBU) For the Uzbeks, gas and pipelines are first and foremost 
about business.  However, a major Uzbek foreign policy objective - 
balancing economic and political relations among the major powers - 
is also well served by this deal. 
Norland