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UNCLAS SECTION 01 OF 02 ASHGABAT 000886 
 
SENSITIVE 
 
SIPDIS 
 
STATE FOR SCA/CEN; EEB; NEA/IR 
PLEASE PASS TO USTDA DAN STEIN 
ENERGY FOR EKIMOFF/THOMPSON 
COMMERCE FOR HUEPER 
 
E.O. 12958: N/A 
TAGS: EPET PGOV EINV TX IR
SUBJECT: TURKMENISTAN/IRAN: AGREEMENT FOR A NEW PRICE AND INCREASED 
EXPORTS OF TURKMEN GAS 
 
ASHGABAT 00000886  001.2 OF 002 
 
 
¶1.  (U) Sensitive but unclassified.  Not for public Internet. 
 
¶2.  (SBU) SUMMARY: On July 12, 2009, Turkmen state media reported 
that Turkmenistan and Iran had agreed to a new price for Turkmen 
natural gas, to be based on an international formula, as well as to 
increase the volume of supplies to 14 billion cubic meters (bcm) of 
gas per year, of which 8 bcm will come from the Korpeje field and 6 
bcm from the Dowletabat field.  Turkmenistan plans to construct a 
gas pipeline from the Dowletabat field to the Iranian border in 2009 
as part of the supplies increase plan.  The two sides also discussed 
the possibility of increasing the supplies to 20 bcm per year.  The 
decisions were made during the visit of an Iranian delegation led by 
Seyed Reza Kasaeizadeh, Advisor to the Minister of Oil of Iran and 
Director General of the National Iranian Gas Export Company. END 
SUMMARY. 
 
¶3.  (SBU) Turkmenistan began supplying gas to Iran in 1997, after 
the Korpeje - Kurtkui gas pipeline was built, linking Turkmenistan's 
western gas fields to Iran's Sarakhs - Sari pipeline.  The pipeline 
was capable of carrying 8 bcm annually and the pipes allowed for 
further increases in pressure to pump up to 13 bcm of gas per year. 
The two countries had enjoyed a good partnership until January 2008, 
when Turkmenistan cut gas supplies to Iran over a gas price 
disagreement, citing maintenance construction problems on the 
Turkmen section of the pipeline.  The supplies resumed in April 
2008, when the two sides agreed on a new price, which was never 
announced publicly. 
 
¶4.  (SBU) The Turkmen section of the new pipeline will likely 
stretch for 15 kilometers, running from the Dowletabat compressor 
station to a point at the Iranian border close to the existing 
Sarakhs - Sari gas pipeline, which is 720/900 millimeters in 
diameter and is capable of carrying up to 10/12 bcm annually.  The 
pipeline was originally built to transport natural gas from the 
Sarakhs, Gonbadli, and Khangiran gas fields to feed the city of 
Mashhad, Iran and a large electrical power plant in Neka.  Iran will 
also need to construct a short pipeline (approximately 7 kilometers 
long) linking the Turkmen section to the Sarakhs - Sari gas 
pipeline. 
 
¶5.  (SBU) The Dowletabat gas field, which is the largest operating 
field in Turkmenistan, is capable of producing 40 bcm of natural gas 
annually and is considered the main supplier to the Central Asia - 
Center pipelines system transporting gas to Russia.  Those supplies 
ceased and most of its wells shut down following the April 9 
pipeline blast and the resulting row between Russia and 
Turkmenistan.  In addition to the existing capacities, Turkmenistan 
recently completed the construction of a new pipeline that is 
designed to bring 4 bcm annually from the southern Garabil/Gurrukbil 
fields to the Dowletabat gas facilities, thus making it possible to 
pump 44 bcm from the Dowletabat compressor station annually. 
 
¶6.  (SBU) COMMENT:  The price of Turkmen gas supplied to Iran is 
unlikely to be made public anytime soon.  It is probably 
significantly lower than either the price Turkmenistan got from 
Gazprom before the April 9 blast and or what it will try to get from 
Gazprom if the supplies to Russia resume this year.  The Iranian 
price, if made public, could be used by Gazprom as a means to insist 
on a lower price for Turkmen gas in future negotiations over the 
resumption of gas supplies to Russia. 
 
¶7.  (SBU) COMMENT CONTINUED: Turkmenistan is capable of delivering 
on its commitment to increase supplies to Iran.  It will not take a 
great amount of time or financial investment to build a 15-kilometer 
pipeline, especially as this will not require building compressor 
stations, and Turkmenistan has sufficient expertise and resources to 
 
ASHGABAT 00000886  002 OF 002 
 
 
complete it in time.  According to a Ministry of Oil and Gas 
representative, the Korpeje and surrounding gas fields can easily 
supply 8 bcm per year.  Although it will take significant resources 
and time to restart the Dowletabat wells, this work can be completed 
even faster that the construction of the new pipeline.  Even if 
supplies to Russia from Dowletabat resume this year, the volume of 
supplies in the near future would likely be much lower than that of 
previous years, making sufficient quantities available for export to 
Iran.  Moreover, the supplies to Iran are expected to increase 
gradually, as it will take time for Iran's level of consumption to 
increase twofold.  Nevertheless, exports of Turkmen gas to Iran will 
increase steadily and could reach 14 bcm per year by mid-2010 as 
consumption in northern Iran grows and production in Iran's Gonbadli 
and Khangiran fields decline due to depletion.  Moreover, increased 
volumes of Turkmen gas can help Iran in meeting its export 
obligations as the Sarakhs - Sari pipeline is connected to the Iran 
- Turkey pipeline through the Sari - Rasht - Tabriz pipeline, which 
is capable of transporting only small volumes of gas. 
 
¶7.  (SBU) COMMENT CONTINUED: The two sides may have discussed the 
possibility of increasing the volume of supplies up to 20 bcm 
annually for the following reasons:  Iran is currently working on 
the ambitious project of constructing the Sarakhs - Jask  pipeline, 
which will transport Central Asian gas from northern Iran to the 
Persian Gulf.  Gas from the Dowletabat field could be used for these 
purposes.  Turkmenistan also might be interested in discussing large 
export volumes as it strengthens its position in negotiations with 
Russia for the resumption of supplies to Gazprom. END COMMENT. 
 
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