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UNCLAS ASHGABAT 000727 
 
SENSITIVE 
SIPDIS 
 
STATE FOR SCA/CEN, EEB 
PLEASE PASS TO USTDA DAN STEIN 
ENERGY FOR EKIMOFF/THOMPSON 
COMMERCE FOR HUEPER 
EAID/W FOR EE/EA 
 
E.O. 12958: N/A 
TAGS: PGOV EPET ECON ETRD IN PK AF TX
SUBJECT:  TURKMENISTAN:  NEGOTIATIONS ON AFGHANISTAN 
PIPELINE MOVE FORWARD, SLOWLY 
 
 
¶1.  (U)  Sensitive but unclassified.  Not for public Internet. 
 
¶2.  (SBU)  SUMMARY:  High-level representatives from 
Turkmenistan, Afghanistan, Pakistan, and India met in 
Ashgabat in late May to resolve some issues that continue to 
stand in the way of more substantive negotiations on the 
envisaged Turkmenistan-Afghanistan-Pakistan-India (TAPI) 
natural gas pipeline project.  The group continued to 
disagree on issues like pricing, but the parties all appear 
to be motivated to try to make the project happen, and 
another meeting of senior representatives will take place in 
July.  The Turkmen have agreed to share the results of their 
recently-completed natural gas reserves audit with the other 
states when the group meets in September, so that the 
project's participants will be more confident that 
Turkmenistan will have enough gas to sell to all its 
customers.  The negotiation process is making progress, but 
slowly.  END SUMMARY. 
 
¶3.  (SBU)  Poloff met June 5 with Asian Development Bank's 
(ADB) local representative, Aina Kekilova to hear about the 
results of the first technical group meeting for te 
Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline 
project.  She said that deputy oil and gas ministers from 
Turkmenistan, Afghanistan, and Pakistan, senior 
representatives from the Indian energy company GAIL, and ADB 
representatives attended the meeting in Ashgabat May 30-31. 
India's deputy minister for oil and gas was conspicuously 
absent. 
 
¶4.  (SBU)  The meeting's primary purpose was to try to hammer 
out remaining impediments on a basic accord that would be 
signed by the four heads of state.  The group also discussed 
three subordinate documents that focused on the rights and 
obligations of the parties regarding transit, pricing, and 
mechanisms for forming a consortium.  There was no discussion 
in this forum about the actual construction of the pipeline, 
which is hoped to as early as 2010.  The deputy ministers 
signed a memorandum of understanding, basically agreeing on 
the parameters for continued negotiations. 
 
¶5.  (SBU)  However, during this meeting, the Afghan 
delegation also gave a presentation designed to build 
confidence that the government of Afghanistan will be able to 
successfully protect the pipeline.  One argument the Afghans 
made was that the majority of the pipeline would be located 
in regions of the country that have seen little conflict. 
The Afghan government is enthusiastic about seeing the 
project happen, she said.  Afghanistan would receive transit 
fees and would benefit from the construction of a railway 
that is also an element of the project.  Officials are also 
hoping the project will provide jobs for as many as 40,000 
unemployed Afghans. 
 
¶6.  (SBU)  Kekilova said that pricing was the most 
significant issue, because Pakistan and India each made 
pricing proposals that the Turkmen government rejected. 
While the two countries accepted that the world market price 
should be considered, they sought to include it as only one 
element in a formula that would yield more reasonable 
pricing.  Turkmen government officials appear to be 
determined to sell their gas southward at world market 
prices, however, and state media reported this stance on the 
day of the deputy ministers' meeting.  This issue is likely 
to continue when the group meets again in July in India. 
 
 
 
¶7.  (SBU)  A second issue complicating negotiations lies in 
the countries' concerns that Turkmenistan will not have 
enough gas to supply the TAPI pipeline, given agreements 
signed with Russia, Iran, and China over the past two years. 
It is hoped that TAPI would transport 30 bcm per year to 
India and Pakistan, and to a lesser extent, Afghanistan. 
Turkmen officials have assured project participants that they 
will have an adequate supply, but the group told the Turkmen 
they must share the audit data on Turkmenistan's natural gas 
reserves that a British firm completed recently.  Kekilova 
reported the Turkmen have agreed to share the results of the 
audit with the technical group when it meets in September 
¶2008. 
 
¶8.  (SBU)  COMMENT:  The negotiation process is making 
progress, but with small steps.  Turkmenistan's pricing 
demands have some of the participants wringing their hands 
about signing the agreement, but they do not yet appear to be 
concerned enough to quit the project.  September's meeting is 
likely to be more dramatic, and it will be interesting to see 
how much information the Turkmen are willing to share with 
TAPI participants about Turkmenistan's gas reserves.  END 
COMMENT. 
HOAGLAND