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UNCLAS SECTION 01 OF 03 ASHGABAT 000343 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR SCA/CEN, EEB 
PLEASE PASS TO USTDA DAN STEIN 
ENERGY FOR EKIMOFF/THOMPSON 
COMMERCE FOR HUEPER 
 
E.O. 12958: N/A 
TAGS: PGOV EPET EAID TX
SUBJECT:  TURKMENISTAN:  MINISTER OF OIL AND GAS DISCUSSES 
PLANS FOR PETROCHEMICAL SECTOR DEVELOPMENT AND TRAINING 
CENTER 
 
REF: A. ASHAGABAT 0332 
 
     ¶B. ASHGABAT 0286 
 
¶1.  (U) Sensitive but unclassified.  Not for public Internet. 
 
¶2.  (SBU) SUMMARY:  Minister of Oil and Gas Baymurat 
Hojamuhamedov told a U.S. Trade and Development Agency 
(USTDA) consultant on March 11 that his Ministry is eager to 
establish a petrochemical industry to receive higher value 
for the country's hydrocarbon resources, as well as to 
establish a major training program for hydrocarbon sector 
personnel.  As the Minister outlined the steps in the 
planning process that his Ministry already has taken and 
received the consultant's feedback, it was clear that the 
Ministry lacks critical expertise that may keep both projects 
from becoming successes.  Hojamuhamedov, however, seems to 
recognize this and has requested USTDA's assistance to put 
these ventures on the right track.  END SUMMARY. 
 
THE HOME OF TURKMENISTAN'S NEW PETROCHEMICAL INDUSTRY 
 
¶3.  (SBU) Minister of Oil and Gas Baymurat Hojamuhamedov told 
a visiting U.S. Trade and Development Agency (USTDA) 
consultant in Turkmenistan on a definitional mission on March 
11 that Turkmenistan wants to get more money for its 
hydrocarbon resources by establishing a petrochemical 
industry, rather than focusing solely on exporting raw 
products.  It plans to begin by building a new refinery and 
oil and gas steam-cracking facility at the same location as 
the Seydi refinery, located in eastern Turkmenistan close to 
the Uzbekistan border (ref. A).  Turkmenistan is focusing on 
Seydi first because its facility, which was never completed 
and which has been largely ignored since Turkmenistan's 
independence in 1991, has fewer capabilities than the 
Turkmenbashy refinery.  As it establishes a petrochemical 
industry, Turkmenistan wants to focus on first producing 
products for domestic markets that will help it to decrease 
its heavy dependence on petrochemical imports. 
 
THERE IS METHOD IN TURKMENISTAN'S PLANNING 
 
¶4.  (SBU) According to the Ministry's plan, Seydi would seek 
to satisfy demand for products like plastic pipes, plastic 
bags and, possibly, toiletries and soaps in eastern and 
central Turkmenistan and possibly also allow for the export 
of small quantities to Uzbekistan and/or Afghanistan.  A 
newly rebuilt Seydi refinery would also seek to fill domestic 
demand for gasoline and oil products in Turkmenistan's east 
and central regions.  A second petrochemical facility that 
would subsequently be built at the Caspian Sea port of 
Turkmenbashy would focus on supplying western Turkmenistan 
and would export any surplus items to foreign markets.  Such 
an arrangement, Hojamuhamedov suggested, would take advantage 
of the two facilities' geographic locations to cut down on 
transportation costs of finished products. 
 
¶5.  (SBU) The USTDA consultant questioned the strategy of 
building two separate, complete refinery/cracker complexes, 
given both the need to produce enough feedstock to keep both 
complexes operating and the cost involved in constructing the 
complexes.  Instead, he suggested, Turkmenistan might 
consider building only one new refinery and one cracker, and 
separating the two facilities, much as many large companies 
split their refining and chemical production divisions. 
Hojamuhamedov asserted that Turkmenistan has enough feedstock 
and funding for two separate complexes.  However, he clearly 
appreciated the honesty of the consultant's comments, asking 
 
ASHGABAT 00000343  002 OF 003 
 
 
whether it would be possible to work further with the 
consultant.  The consultant then suggested that the Ministry 
should work with USTDA, stating that he had put together a 
proposal for a possible strategic feasibility study that, if 
approved by USTDA, would look at the immediate and long-term 
markets, and the competition.  It would also look at 
Turkmenistan's feedstock situation and transportation costs, 
and then work with computer simulations to identify the best 
short- and long-term options.  A second phase of this project 
would then look at the details of production, including both 
which products Turkmenistan should seek to produce and best 
petrochemical complex designs. 
 
MINISTER ASKS FOR ASSISTANCE IN PETROCHEMICAL SECTOR 
 
¶6.  (SBU) The minister clearly appreciated both the 
consultant's honesty and the offer, and said bluntly, "We 
need to find a consultant, and we want to work with you." 
Although Hojamuhamedov said that he cannot, for political 
reasons, delay going forward in the next month with a design 
tender for Seydi -- Turkmenistan's president has already 
approved the plan to build a petrochemical complex there -- 
he eagerly agreed to the suggestion that the first stage of 
the strategic feasibility study and the tender could go 
forward in parallel.  If USTDA would agree to go forward with 
the study, he promised the Ministry would work with the 
Cabinet of Ministers to facilitate the fastest-possible 
processing of the study proposal.  (NOTE:  USTDA has since 
agreed to fund a study.  END NOTE.) 
 
REQUEST FOR A MAJOR NEW TRAINING PROGRAM 
 
¶7.  (SBU) As he had February 29 with USTDA Regional Director 
Dan Stein (Ref B), Hojamuhamedov also asked for USTDA 
assistance with developing an oil and gas training center. 
He noted during the Soviet era there had been such a center, 
which had provided continuing education to hydrocarbon sector 
employees, but that center had stopped functioning after 
Turkmenistan became independent.  The Ministry now wants to 
reestablish that center, and has been consulting with a 
number of foreign companies, looking at possible models. 
 
¶8.  (SBU) According to Hojamuhamedov, Turkmenistan wants to 
provide training to all levels -- from low-level welders to 
upper-level experts and managers, with a focus on all aspects 
of the hydrocarbon and petrochemical industries.  He wants 
assistance with creating a plan for a step-by-step 
establishment of the training program, which would be spread 
among Turkmenistan's provinces.  The USTDA consultant noted 
that this is a big project.  Nevertheless, while nobody has 
offered a program whose scope is comparable to what the 
Ministry wants, there are some good models, including the 
French Institute for Petroleum.  In the United States, these 
types of training seminars are carried out within major oil 
companies, rather than centrally.  The minister said that he 
is considering contracting with various companies, based upon 
their expertise, to deliver such training opportunities on a 
turnkey basis.  He proposed drawing on a Rosneft program for 
oil and Gazprom program for gas. 
 
¶9.  (SBU) Stressing the need for a year-in, year-out 
commitment, the consultant suggested that developing a 
training program would require a longer-term approach than 
Hojamuhammedov had outlined.  If USTDA were to agree to take 
on this possible program, it would need to determine what 
elements Turkmenistan already has in place.  Then, based on 
that, develop a matrix of where, how, and what Turkmenistan 
 
ASHGABAT 00000343  003 OF 003 
 
 
wants in its new training center.  USTDA would then need to 
identify a training specialist who could come to Turkmenistan 
and help to bring together the various elements. 
Hojamuhamedov stated that Turkmenistan has already completed 
the first two steps, but needs help pulling together a 
training center matrix.  The consultant agreed to recommend 
that USTDA consider funding such a program. 
 
¶10.  (SBU) COMMENT:  The willingness of more -- though not 
all -- hydrocarbon sector officials to admit they are in over 
their heads is a positive development.  Hojamuhamedov's frank 
request for assistance may have been eased by his familiarity 
with programs USTDA is doing with the State Agency for 
Hydrocarbon Resources, which so far have been quite 
successful.  It was clear that he appreciates the expertise 
that USTDA can bring to the equation.  END COMMENT. 
HOAGLAND