VZCZCXRO3547
PP RUEHAG RUEHAST RUEHBI RUEHCI RUEHDF RUEHIK RUEHLH RUEHLN RUEHLZ
RUEHPW RUEHROV RUEHVK RUEHYG
DE RUEHAH #1148/01 2462043
ZNR UUUUU ZZH
P 022043Z SEP 08
FM AMEMBASSY ASHGABAT
TO RUEHC/SECSTATE WASHDC PRIORITY 1450
INFO RUCNCLS/ALL SOUTH AND CENTRAL ASIA COLLECTIVE PRIORITY
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RUCNMEM/EU MEMBER STATES COLLECTIVE PRIORITY
RUEHAD/AMEMBASSY ABU DHABI PRIORITY 0427
RUEHAK/AMEMBASSY ANKARA PRIORITY 4228
RUEHBJ/AMEMBASSY BEIJING PRIORITY 2040
RUEHKL/AMEMBASSY KUALA LUMPUR PRIORITY 0222
RUEHKO/AMEMBASSY TOKYO PRIORITY 1905
RUEHIT/AMCONSUL ISTANBUL PRIORITY 2476
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
RHMFIUU/CDR USCENTCOM MACDILL AFB FL PRIORITY
RHEBAAA/DEPT OF ENERGY WASHDC PRIORITY
RUEHVEN/USMISSION USOSCE PRIORITY 2834
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UNCLAS SECTION 01 OF 02 ASHGABAT 001148 
 
SENSITIVE 
SIPDIS 
 
STATE FOR SCA/CEN, EAP/CH, EEB 
PLEASE PASS TO USTDA DAN STEIN 
ENERGY FOR EKIMOFF/THOMPSON 
COMMERCE FOR HUEPER 
 
E.O. 12958: N/A 
TAGS: PGOV PREL EINV EPET TX CH
SUBJECT: TURKMENISTAN: CHINESE PRESIDENT'S VISIT SWIMMING 
IN NATURAL GAS GOODWILL 
 
REF: 07 ASHGABAT 1210 
 
¶1.  (U)  Sensitive but unclassified.  Not for public Internet. 
 
¶2.  (SBU)  SUMMARY:  The Chinese president's second visit 
here in less than a year offered a strong indication that 
bilateral cooperation, in particular on the planned 
Turkmenistan-China pipeline, is proceeding very well.  If 
they have not done so already, the two sides will soon sign 
an additional agreement formalizing the Turkmen president's 
offer to expand the amount of natural gas that will be 
delivered to China annually beginning in 2009.  With CNPC's 
commercial presence growing in Turkmenistan, China's overall 
trade and economic influence seems poised to strengthen as 
well.  Senior Turkmen government officials may be impressed 
with CNPC's stringent efforts to meet deadlines and deliver 
on promises, and that may bode well for other Chinese 
companies interested in doing business here in the near term. 
 END SUMMARY. 
 
¶3.  (U)  Chinese President Hu Jintao made a second official 
visit to Turkmenistan August 29-30, less than a year after 
his Fall, 2007 trip to Ashgabat (reftel).  This time, he and 
President Berdimuhamedov signed a package of minor political 
and economic documents designed to further expand the 
relationship in areas such as trade, law enforcement and 
anti-terrorism cooperation, and Berdimuhamedov confirmed 
Turkmenistan's continued support for the "One China Policy." 
President Berdimuhamedov also hosted a ceremony to present 
the "Niyazov Medal" to Hu Jintao for his efforts to develop 
the relationship between the two states. 
 
¶4. (SBU)  More importantly, however, the two presidents were 
reportedly close to signing a new framework agreement 
relating to the Turkmen president's promise to deliver even 
more natural gas through the Turkmenistan-China pipeline 
beginning in 2009.  In mid-August, during his visit to 
Beijing for the Olympics, Berdimuhamedov announced that 
Turkmenistan would deliver 40 bcm per year, some 10 bcm more 
than the countries had agreed to in July 2007.  Some 17 bcm 
of gas will come from areas that CNPC is developing and the 
remaining 13 bcm will come from other nearby fields, in 
exchange for the gas processing and purifying facilities CNPC 
is also constructing, all in Lebap Province near the Amu 
Darya. 
 
¶5.  (SBU)  During Hu's visit the Turkmen press reported that 
the Samandepe and Altyn Asyr gas fields have estimated 
reserves of 1.3 trillion cubic meters of natural gas, in 
addition to the Bagtyyarlyk field.  CNPC's subsidiary 
company, International-Turkmenistan, has been doing the 
exploratory and development work at these fields at an 
assertive pace, and has expanded its commercial footprint in 
Lebap Province in recent months.  The company recently 
expanded its Ashgabat offices on Archabil street, to include 
both the Aziya hotel and the Dayanch hotel next door.  All of 
the companies that are involved in projects relating to the 
pipeline and the production to fill it are racing to meet the 
strict deadlines outlined in the July 2007 contract.  The 
Russian company Stroitransgas was working on the 
188-kilometer Turkmen section of the pipeline. 
 
¶6.  (U)  The presidents also discussed expanding the level of 
trade between the countries.  Turkmenistan imports metal 
work, equipment, railway equipment, communications 
technology, home appliances, light industry products, 
construction materials, and housewares from China.  China is 
 
ASHGABAT 00001148  002 OF 002 
 
 
Turkmenistan's fifth largest trade partner.  Chinese 
companies are invested in 49 different projects here worth 
almost $1.3 billion, the majority of which are in the oil and 
gas sector. 
¶7.  (SBU)  COMMENT:  There is little question that CNPC's 
visibility in Turkmenistan, in particular, is growing.  With 
China's commercial activity expanding at such a healthy rate, 
its trade and economic influence seems poised to strengthen 
as well.  One key to Chinese economic success here is likely 
CNPC's strong performance over the past year.  Senior Turkmen 
government officials may be impressed with its stringent 
efforts to meet deadlines and deliver on promises that will 
bring them one step closer to a dream of independent gas 
export, and they may now be more open to giving other Chinese 
companies similar opportunities in the near term.  But absent 
much higher-than-expected CNPC production totals, 
Berdimuhamedov's promise to deliver 40 bcm of gas per year 
has many oil and gas experts wondering how he will be able to 
deliver on his new contracted commitments, given the 
hydrocarbon sector's disappointing production totals so far 
this year.  END COMMENT. 
CURRAN