VZCZCXRO0263
PP RUEHAG RUEHAST RUEHBI RUEHCI RUEHDBU RUEHDF RUEHIK RUEHLH RUEHLN
RUEHLZ RUEHPW RUEHROV RUEHVK RUEHYG
DE RUEHAH #1209/01 3111229
ZNR UUUUU ZZH
P 071229Z NOV 07
FM AMEMBASSY ASHGABAT
TO RUEHC/SECSTATE WASHDC PRIORITY 9666
INFO RUCNCLS/ALL SOUTH AND CENTRAL ASIA COLLECTIVE PRIORITY
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RUCNMEM/EU MEMBER STATES COLLECTIVE PRIORITY
RUEHAK/AMEMBASSY ANKARA PRIORITY 2951
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RUEHKO/AMEMBASSY TOKYO PRIORITY 0647
RUEHIT/AMCONSUL ISTANBUL PRIORITY 1224
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UNCLAS SECTION 01 OF 02 ASHGABAT 001209 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR SCA/CEN, EUR/RUS, EUR/CARC, EEB 
PLEASE PASS TO USTDA DAN STEIN 
COMMERCE FOR HUEPER 
ENERGY FOR EKIMOFF/THOMPSON 
 
E.O. 12958: N/A 
TAGS: PGOV PREL EINV EPET RS AJ TX
SUBJECT: TURKMENISTAN:  U.S. FIRMS SEEKING TO ENTER HYDROCARBON 
SECTOR 
 
¶1.  (U) Sensitive but unclassified.  Business Sensitive.  Not for 
public Internet. 
 
¶2.  (U) SUMMARY:  Moderate reforms and a promise of a better 
investment climate in Turkmenistan by the country's new leadership 
have attracted renewed serious interest from U.S. oil majors, 
including both old and potential new partners.  A September 22-29 
U.S. government-funded visit to the United States by high-level 
Turkmenistani hydrocarbon officials helped promote some of these new 
contacts.  The majors can offer more advanced technology and serious 
investment in support of Turkmenistan's own plans to expand its 
current oil and gas production and export options.  Oil companies 
also bring to the table issues that would help improve 
Turkmenistan's overall investment climate and petroleum legislation. 
 Many of these firms will be participating in the November 13-15 
Turkmenistan International Oil and Gas Exhibition.  This cable 
offers post's understanding of the state of play of those firms 
which have expressed renewed interest in Turkmenistan.  END SUMMARY. 
 
 
THE U.S. FIRMS:  MARATHON OIL 
 
¶3.  (SBU) Marathon is the fourth-largest U.S.-based integrated oil 
and gas company and the fifth-largest U.S. refiner.  Marathon made 
its first expression of interest in working in Turkmenistan during 
the September visit to the United States by Turkmen hydrocarbon 
officials.  In particular, Marathon seems interested in bringing to 
Turkmenistan a proprietary GTF (Gas-to-Fuel) technology that it is 
currently developing.  Although Turkmenistan has already received 
several similar proposals from non-U.S. companies, Marathon voiced 
its readiness to present advantages of its technology, including 
lower cost and high conversion efficiency (around 90%).  Marathon is 
currently building a GTF demonstration plant in the United States. 
In an effort to attract more foreign companies to develop offshore 
Caspian blocks, State Agency has also requested the company to make 
a presentation on its offshore experience and capabilities. 
Marathon plans to visit Turkmenistan in the first week of December. 
 
EXXONMOBIL 
 
¶4.  (SBU) In 1996 Mobil joined Monument Oil and Gas (UK) (NOTE: 
Monument was ultimately taken over by Burren Energy, a UK firm.  END 
NOTE) and the Government of Turkmenistan in the PSA for an onshore 
block located close to Balkanabat City (formerly Nebitdag).  By the 
end of 1998, ExxonMobil acquired a second onshore PSA -- 
Garashsyzlyk-2 field.  In 1998 Exxon Turkmenistan entered into a 
joint Technical Study Agreement to evaluate the potential for 
exploration, development and marketing to China of gas from the 
right bank of the Amu Darya River in eastern Turkmenistan. 
 
¶5.  (SBU) ExxonMobil decided to pull out of Turkmenistan in March 
¶2002.  The official reason for this decision was its disappointing 
test drills.  However, there is evidence that the company was forced 
out due to ExxonMobil's involvement in developing the ACG 
(Azeri-Chirag-Guneshli) fields in Azerbaijan.  According to some 
press reports, Mobil was invited by Turkmenistan in June 1998 to 
negotiate an agreement that would allow it to work the Serdar field, 
located in the disputed territory on the Turkmen-Azeri border. 
Mobil said it would not begin work until the two states reached an 
agreement over its ownership. 
 
¶6.  (SBU) Post does not know whether ExxonMobil has made a formal 
proposal to the Government of Turkmenistan.  During the September 
hydrocarbon visit to the United States, ExxonMobil emphasized that 
its improved seismic imaging, drilling technology and reservoir 
modeling are very relevant to Turkmenistan's current needs.  An 
ExxonMobil team will attend TIOGE and hold meetings with 
Turkmenistan's State Agency for Hydrocarbon Resources and with 
Deputy Chairman of the Cabinet of Ministers for Oil and Gas 
Tachberdi Tagyev. 
 
ASHGABAT 00001209  002 OF 002 
 
 
 
CONOCOPHILLIPS 
 
¶7.  (SBU) This company has conducted a series of negotiation rounds 
with the State Agency for the Management and Use of Hydrocarbon 
Resources.  Post is not informed about the contract area 
ConocoPhillips is negotiating with Turkmenistan.  According to some 
unofficial reports, ConocoPhillips will partner with Russia's Lukoil 
in this project.  A company representative of ConocoPhillips told an 
embassy economic assistant that the firm is ready to sign a 
production sharing agreement (PSA) with Turkmenistan during the 
upcoming TIOGE event. 
 
CHEVRON 
 
¶8.  (SBU) Chevron officials told the Charge in April that, although 
it is ready to work on oil extraction in Turkmenistan's Caspian 
basin, the company very much wants to become involved in developing 
gas production in eastern Turkmenistan.  In July Chevron proposed to 
help develop the offshore Serdar field and resolve the dispute 
between Turkmenistan and Azerbaijan.  Later in September, Chevron 
offered to form an onshore joint venture in the Amu Darya basin to 
discover, develop and export sub-salt gas resources.  The Executive 
Director of the State Agency for the Management and Use of 
Hydrocarbon Resources Bayrammyrat Myradov told the Charge October 2 
that such an arrangement would be a "breakthrough solution" if it 
goes through.  Chevron is working to open an initial office in the 
Ak Altyn Hotel. 
 
AND A NOT-REALLY U.S. FIRM: BP/TNK-BP 
 
¶9.  (SBU) When the Charge first met with representatives of BP Oil 
International in July, they told him BP wanted to enter Turkmenistan 
and was working on identifying the most appropriate "vehicle" for 
penetrating the Turkmenistani market.  Options on the table included 
BP, TNK-BP (a Russia-registered subsidiary of BP), or a combination 
of BP and TNK-BP.  At that time, the BP officials voiced some 
reservation about TNK-BP which, they said, "is totally separate from 
us."  Since then, TNK-BP senior management have made a series of 
trips to Turkmenistan and met with President Berdimuhamedov more 
than once.  In follow-up meetings with the Embassy, BP visitors have 
probed whether the U.S. government in its energy policy is working 
to "decrease the influence of Russia and Iran" in Turkmenistan. 
They have also weighing whether a Russian company has advantages 
over firms from other countries.  TNK-BP i planning to open an 
office in Ashgabat that will also be used by BP.  It remains unclear 
to us if both firms have equal interest in Turkmenistan, or if they 
are hedging bets between themselves. 
 
¶11.  (SBU) COMMENT:  U.S. hydrocarbon firms appear to be ahead of 
most other foreign companies in their negotiations for joint 
projects with Turkmenistan.  U.S. firms' experience, demonstrated 
technical expertise, and willingness to consider non-traditional and 
innovative arrangements in order to address the Government of 
Turkmenistan's reluctance to allow western firms a foothold in its 
onshore gas fields seem to be beneficial in this regard.  However, 
Turkmenistani officials' lack of confidence in dealing with 
international firms remains a potential problem that could cause the 
still-fragile alliances under discussion to come unstuck.  END 
COMMENT 
 
HOAGLAND