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DE RUEHAH #1362/01 2891254
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R 151254Z OCT 08
FM AMEMBASSY ASHGABAT
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UNCLAS SECTION 01 OF 02 ASHGABAT 001362 
 
SIPDIS 
 
STATE FOR SCA/CEN, EEB PLEASE PASS TO USTDA DAN STEIN, SPECIAL ENVOY 
GRAY, ENERGY FOR EKIMOFF/THOMPSON 
COMMERCE FOR HUEPER 
 
E.O. 12958: N/A 
TAGS: PGOV ECON EPET EINV TX
SUBJECT:  TURKMENISTAN: IMMENSE VOLUMES OF NATURAL GAS ARE CONFIRMED 
IN EASTERN TURKMENISTAN 
 
REF: ASHGABAT 1324 
 
¶1. (U) Sensitive but unclassified. Not for public Internet. 
 
¶2.  (SBU) SUMMARY: The general manager of the British firm Gaffney, 
Kline & Associates, which just completed an independent audit of the 
natural gas fields in South Yoloten-Osman and Yashlar, presented the 
results of their study to a special session of the Cabinet of 
Ministers on October 13th.  The audit verifies that the volume of 
gas in the South Yoloten-Osman field ranges from four trillion to 
fourteen trillion cubic meters of natural gas, making it the fourth 
or fifth largest field in the world.  The government of Turkmenistan 
had gone to great lengths to ensure the independence of the audit in 
order to reassure foreign investors regarding several large-scale 
gas pipeline construction projects.  Deputy Chairman Tagiyev had 
told Western visitors that the audit would show an even higher 
volume.  Since two of the individuals present in that meeting 
confirmed this to us, we wonder if Tagiyev was trying to impress his 
foreign visitors.  At least one observer believes the Gaffney, Kline 
audit is a "conservative" estimate of Turkmenistan's gas reserves, 
because there are still 27 other fields onshore to evaluate.  END 
SUMMARY. 
 
EVALUATION OF EASTERN TURKMENISTAN GAS RESERVES REVEALED 
 
¶3. (SBU) On October 13, President Berdimuhamedov held an expanded 
session of the Cabinet of Ministers in which Jim Gillett, Manager of 
the British firm Gaffney, Kline & Associates (GKA) presented the 
results of its audit of gas reserves in the South Yoloten-Osman and 
Yashlar fields in eastern Turkmenistan. The audit had been conducted 
in accordance with international standards for the evaluation and 
classification of natural gas reserves, and confirms that volume of 
deposits in South Yoloten-Osman field ranges between 4 trillion 
cubic meters to 14 trillion cubic meters of natural gas.  This makes 
it the fourth or fifth largest natural gas field in the world. 
 
AUDITING TO REASSURE FOREIGN INVESTORS 
 
¶4.  (SBU)  Following Mr. Gillett's presentation, President 
Berdimuhamedov underscored Turkmenistan's absolute confidence in the 
abundance of its hydrocarbon reserves.  He said that the fact that 
international companies were closely involved in the audit of oil 
and gas fields was essential in order to reassure large-scale 
foreign investors in the development of gas fields and construction 
of pipelines.  He said that the audit proves that Turkmenistan may 
now move ahead with all plans in the sphere of fuel energy expansion 
and development.  He went on to praise the work of the Turkmen 
specialists that was confirmed by the audit. 
 
JOINT EFFORTS AND MECHANISM OF EVALUATION 
 
¶5.  (SBU) Later,  in an interview with Turkmen Dowlet Khabarlary 
(Turkmen State Information Agency), Gillett  said that the GKA's 
audit, conducted in accordance with international standards, was 
able to confirm the "excellent work" carried out and the results 
obtained  by the state corporation "Turkmengeologiya" 
(TurkmenGeology) after the discovery of a vast natural gas field. 
Turkmen geologists then spent a month at GKA's UK offices presenting 
the results of their data as the audit was prepared. 
 
VAST GAS RESERVES CONFIRMED 
 
¶6.  (SBU) According to Gillett, GKA's evaluations are routinely 
presented at three levels: "low, optimal and high."  On South 
Yoloten-Osman field, the low estimate was calculated at 4 trillion 
cubic meters, optimal at 6 trillion cubic meters, and the high at 14 
trillion cubic meters of natural gas.  He said that South 
Yoloten-Osman's optimal estimate is five times larger than the 
largest existing gas field at Dowletabad, making South Yoloten-Osman 
the fourth or fifth largest gas field in the world. 
 
DEVELOPMENT OF THE FIELD 
 
ASHGABAT 00001362  002 OF 002 
 
 
 
¶7.  (SBU) Gillett went on to say that that it is generally 
preferable to develop such enormous fields in stages, at the rate of 
10 billion cubic meters of gas per year.  He recommended that 
development of the South Yoloten-Osman be increased gradually, up to 
a maximum of 70 billion cubic meters per year. 
 
EVALUATION OF ANOTHER FIELD 
 
¶8.  (SBU) In addition to the South Yoloten-Osman field, GCA 
conducted an audit of the Yashlar field and estimates reserves there 
of between .25 trillion 1.5 trillion cubic meters of natural gas. He 
concluded by emphasizing that GKA looks forward to offering its 
services to Turkmenistan in the future. 
 
"CONSERVATIVE" ESTIMATE 
 
¶9. (SBU) One longtime Western observer told us that he believes that 
the Gaffney-Kline audit was a "conservative" estimate of the 
country's gas reserves, because there are another 27 fields onshore 
to evaluate.  He also offered that depending on extraction rates, 
the South Yoloten-Osman reserves could last 40-70 years (possibly 
more), but are very high in sulfur.  Given the technological 
challenges of extracting the sour gas, it will take an initial 
investment of at least $4 - 5 billion to start.  In addition, they 
will need 4,000 - 5,000 workers.  Recognizing that they do not have 
either the sufficient technological expertise or level of qualified 
workers, it will take outside assistance.  And given the technology 
necessary, it would rule out cooperation with Russian or Chinese 
firms.  Only Western firms have the expertise.  Our contact pointed 
out that the Chinese had tried to drill subsalt and the result was 
an accident where 44 workers were killed. 
 
¶10. (SBU) COMMENT:  Turkmenistan wisely engaged an internationally 
recognized firm to conduct that audit of the reserves of its eastern 
gas fields.  This was absolutely essential to attracting large-scale 
foreign investors for both the development of the fields and a 
number of significant gas pipeline construction projects.  It 
further serves to assure the international community and businesses 
that Turkmenistan has the volume to meet its natural gas export 
demands.  However, extraction is another issue.  Deputy Chairman 
Tagiyev had told Western visitors that the audit would show an even 
higher volume (reftel).  Since two of the individuals present 
confirmed this to us, we are unsure if Tagiyev was being hopeful or 
just wanted to impress his foreign visitors, knowing that 
Turkmenistan has even more reserves, in any case.  END COMMENT. 
 
CURRAN