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DE RUEHAH #1172/01 3041241
ZNR UUUUU ZZH
P 311241Z OCT 07
FM AMEMBASSY ASHGABAT
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UNCLAS SECTION 01 OF 02 ASHGABAT 001172 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR SCA/CEN, EEB 
PLEASE PASS TO USTDA DAN STEIN 
 
E.O. 12958: N/A 
TAGS: PGOV PREL EPET EINV ETRD TX
SUBJECT: TURKMENISTAN: MAJOR INTERNATIONAL OIL PLAYERS 
MANAGE THEIR PIECES OF THE PIE 
 
 
¶1.  (U) Sensitive but unclassified.  Not for public Internet. 
 
¶2.  (U)  With the Turkmen International Oil and Gas 
Exhibition less than two weeks away, post provides the 
following compendium of the major foreign companies 
cooperating with the Turkmen government on oil exploration 
and development, with some updated facts and figures on their 
efforts to develop the sector.  A variety of international 
companies continue to develop or operate the contract areas 
of the five major production sharing agreements (PSAs), both 
offshore and on Turkmen territory.  We have excluded the 
China National Oil Company from this report. 
 
CHELEKEN 
 
¶3.  (U)  Cheleken is an offshore contract area operated by 
Dragon Oil (UAE/UK ownership).  The area is composed of two 
Soviet-era oil fields, Jeitun and Jygalybeg, which are 
located in shallow water.  Dragon Oil has invested some $760 
million, including $200 million in just the last two years, 
producing over four million tons of oil.  Dragon Oil's 
priority has been the refurbishment of the infrastructure at 
its two fields.  The company has a 25-year PSA with the 
government to work at these fields.  The company projects it 
will produce about 1.6 milllion tons of crude.  Dragon Oil 
ships its oil under swap agreements via ports in Iran.  Minor 
volumes are also shipped to Baku.  In June, Dragon Oil 
commissioned a new $25 million oil production and storage 
facility (NPSF) with an annual capacity of 2.5 million tons. 
 
OFFSHORE BLOCK 1 
 
¶4.  (U)  Petronas (National Malaysian Petroleum Corporation) 
signed a 25-year PSA to develop Block 1 in 1996.  The block 
includes the Magtumguly, Ovez, and Diyarbekir fields. 
Diyarbekir began production in 2006.  In 2007, Petronas 
expects to produce about 300,000 tons of crude.  Petronas 
discovered major gas reservoirs that would also allow the 
company to produce up to 10 bcm by 2010.  Since 1996, 
Petronas has invested more than $700 million.  In 2006, 
Petronas brought a mobile offshore production unit (MOPU) and 
a Floating Storage and Offloading system (FSO) into the 
country.  In the village of Kiyanly, north of Turkmenbashi, 
Petronas is building a gas treatment plant at a cost of about 
$500 million.  The company plans to transport its gas onshore 
for treatment.  When operational, the facility will be able 
to process 10 bcm per year.  Construction is due to be 
completed in Spring 2010. 
 
¶5.  (U)  Also in Kiyanly, Petronas is building a $60 million 
platform fabrication facility.  The MDP-A (Magtumguly 
Drilling Platform) will be installed in November 2007. 
Petronas is currently dredging a channel to deliver the 
platform.  A drilling rig, to be installed on MDP-A, is on 
standby.  Petronas subcontractor, MMHE is transporting large 
sections of the platform via the Volga-Don Canal and is 
assembling them in Kiyanly. 
 
OFFSHORE BLOCKS 11 AND 12 
 
¶6.  (U)  The Danish firm Maersk originally explored these 
blocks alone after signing a PSA in 2002.  After becoming 
disappointed with seismic and other exploration results, it 
sold a 20 percent interest in the blocks to the German 
company Wintershall, and a 30 percent interest to India's 
ONGC Mittal Energy in 2007.  The consortium is not yet in the 
production phase. 
 
 
ASHGABAT 00001172  002 OF 002 
 
 
NEBIT DAG 
 
¶7.  (U)  The British oil company Burren has a PSA in western 
Turkmenistan for three operating oil fields, Burun, Balkan 
and Uzboy.  These fields have been producing a modest 23,000 
barrels per day.  Burren has been the operator of the PSA 
since 2000.  From 1996-2000, the company held a 25 percent 
interest in the PSA along with Mobil and the British firm 
Monument.  Post estimates that Burren has invested over $300 
million in the development of this PSA. 
 
KHAZAR 
 
¶8.  (U)  The Austrian-registered Mitro, formerly known as 
Pado Oil, signed a 25-year PSA in 2000 for this onshore 
contract area.  Mitro formed a consortium with Turkmennebit 
State Concern to develop the area where Turkmennebit serves 
as the operator.  According to Pado's original plan, the 
company was to have invested around $135 million.  The 
consortium has produced about two million tons of oil thus 
far. 
 
¶9.  (SBU)  COMMENT:  International hydrocarbon firms continue 
to invest actively on a large scale to overhaul old 
production fields and facilities while also building new 
state-of-the-art facilities.  The companies that have put 
down roots here will be well-represented at the oil and gas 
exhibition, and have been aggressively advocating their 
interests with President Berdimuhamedov while he considers 
Turkmenistan's next steps on hydrocarbon development. 
Berdimuhamedow, however, has demonstrated that he is open to 
contract discussions with both old and new players, so expect 
the competition to continue.  END COMMENT. 
HOAGLAND