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PP RUEHAG RUEHAST RUEHBI RUEHCI RUEHDBU RUEHDF RUEHIK RUEHLH RUEHLN
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DE RUEHAH #0369/01 0820850
ZNR UUUUU ZZH
P 230850Z MAR 09
FM AMEMBASSY ASHGABAT
TO RUEHC/SECSTATE WASHDC PRIORITY 2510
INFO RUCNCLS/ALL SOUTH AND CENTRAL ASIA COLLECTIVE PRIORITY
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RUEHIT/AMCONSUL ISTANBUL PRIORITY 3209
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UNCLAS SECTION 01 OF 02 ASHGABAT 000369 
 
SENSITIVE 
SIPDIS 
 
SCA/CEN; EEB 
PLEASE PASS TO USTDA DAN STEIN 
ENERGY FOR EKIMOFF/THOMPSON 
COMMERCE FOR HUEPER 
 
E.O. 12958: N/A 
TAGS: PGOV EPET TX
SUBJECT: TURKMENISTAN'S OIL AND GAS MINISTER CONFIDENT THAT 
STATE ASSETS CAN BOOST GAS PRODUCTION 
 
¶1.  (SBU)  SUMMARY: According to Turkmenistan's Minister of 
Oil and Gas, the country has abundant, as yet undeveloped, 
oil resources.  He said his Ministry handles strategic 
planning for the hydrocarbon sector.  Significant increases 
in gas production are planned and will be managed by state 
enterprises, entering service contracts with foreign firms as 
needed.  The Minister mentioned that the price for exported 
gas is controlled by the President, based on a European 
formula.  Preparations for new pipelines to Russia and Iran 
are proceeding.  END SUMMARY. 
 
ABUNDANT OIL RESOURCES 
 
¶2.  (SBU) On March 17, Minister for Oil and Gas Industry and 
Mineral Resources Annaguly Deryayev met with a visiting U.S. 
energy expert to discuss the Ministry's role in hydrocarbon 
development.  The Minister kicked off the meeting by noting 
that Turkmenistan currently has 150 oil fields, with only 30 
percent of them currently in development. 
 
OIL AND GAS MINISTRY HANDLES STRATEGIC PLANNING 
 
¶3.  (SBU) He outlined briefly the roles of the various 
government entities that handle oil and gas issues.  Turkmen 
State Oil Concern is responsible primarily for managing the 
production processes for oil, and the State Gas 
Concern--production of natural gas.  He said that Turkmen 
Geological Corporation is responsible for resource 
exploration, and the State Oil and Gas Construction Concern 
handles the construction of related facilities.  The State 
Agency for the Management and Use of Hydrocarbons, he said, 
primarily manages the offshore PSAs.  The Turkmenbashy and 
Seyidi refineries are under the ministry's umbrella, as are 
the State Chemical Concern, the State Fisheries Committee, 
and a special committee on development of the Avaza National 
Tourist Zone, he added.  The Oil and Gas Ministry itself is a 
strategic planning body that also ensures the president's 
policies regarding the sector are fulfilled. 
 
AMBITIOUS GOALS FOR NEW GAS PRODUCTION... 
 
¶4.  (SBU)  Deryayev, referring to the national plan for oil 
and gas development to 2030, indicated that the government 
expected the ambitious production goals for gas (some 250 
bcm) to be met by additional production coming from the 
Central Karakum fields, South Yoloten and Garagul Gurrukbil. 
(NOTE:  Post assumes that Garagul Gurrukbil refers to a group 
of fields just east of Dovletabad in the southernmost corner 
of the country.  END NOTE.) 
 
...TO BE HANDLED BY STATE ENTERPRISES 
 
¶5.  (SBU)  Deryayev said that most oil production comes from 
the western regions of the country (70 percent) and from 
offshore fields (30 percent).  He added that the government 
is expecting state enterprises, rather than foreign 
companies, to produce nearly 100 percent of the gas in coming 
years.  He indicated that Turkmen Gas has an effort underway 
to sign service agreements with companies like Weatherford, 
Halliburton, Smith International and others to boost gas 
production at existing gas extraction operations, where there 
is a major need to modernize gas extraction and processing 
facilities. 
 
GAS EXPORT PRICING CONTROLLED BY PRESIDENT 
 
¶6.  (SBU)  Responding to questions about how Turkmenistan 
handles the pricing of its gas, Deryayev became more nervous, 
 
ASHGABAT 00000369  002 OF 002 
 
 
but said that recent price increases for exports to Russia 
and Iran were "controlled by the president," but were set 
based on a "European formula".  Turkmenistan re-negotiates 
prices with its export partners every three months, he said, 
but he did not want to discuss the details of Turkmenistan's 
pricing agreement with Russia. 
 
¶7.  (SBU)  He indicated that a feasibility study for the 
proposed Caspian littoral pipeline that would send more gas 
to Russia from the western part of the country was currently 
underway.  He also noted that a newly-proposed pipeline from 
Turkmenistan's Yolotan area southwest to Iran would have a 
6-8 bcm per year capacity.  In response to questions about 
how the recently-reported agreement with Iran happened and 
what it entailed, Deryayev denied the deal included any 
low-interest loans from Iran, because "Turkmenistan has a 
policy against taking loans from foreign governments." 
 
¶8.  (SBU)  COMMENT:  Although the 35 year-old Deryayev is a 
former drill engineer who knows the nuts and bolts of oil 
extraction, he seemed uncomfortable in the policy and 
strategic planning role he has had since his October 2008 
ministerial appointment.  His official biography suggests he 
has never been out of the country.  Like so many other senior 
officials in this government, however, he has quickly learned 
what he should or should not share with interested foreign 
visitors.  END COMMENT. 
MILES