VZCZCXRO5089
PP RUEHAG RUEHAST RUEHBI RUEHCI RUEHDBU RUEHDF RUEHIK RUEHLH RUEHLN
RUEHLZ RUEHNEH RUEHPW RUEHROV RUEHSK RUEHSR RUEHVK RUEHYG
DE RUEHAH #0515 1111229
ZNR UUUUU ZZH
P 211229Z APR 09
FM AMEMBASSY ASHGABAT
TO RUEHC/SECSTATE WASHDC 2700
INFO RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
RUCNCLS/ALL SOUTH AND CENTRAL ASIA COLLECTIVE
RUCNCIS/CIS COLLECTIVE
RUCNMEM/EU MEMBER STATES COLLECTIVE
RUEHAK/AMEMBASSY ANKARA 5117
RUEHBJ/AMEMBASSY BEIJING 2867
RUEHKO/AMEMBASSY TOKYO 2732
RUEHIT/AMCONSUL ISTANBUL 3361
RUCNDT/USMISSION USUN NEW YORK 0975
RHMFIUU/CDR USCENTCOM MACDILL AFB FL
RUEHVEN/USMISSION USOSCE 3492
RUEAIIA/CIA WASHDC
RHEFDIA/DIA WASHDC
RHEHNSC/NSC WASHDC
RUEKJCS/SECDEF WASHDC
RUEKJCS/JOINT STAFF WASHDC

UNCLAS ASHGABAT 000515 
 
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: EPET PGOV EINV TX
SUBJECT: TURKMENISTAN: GERMAN COMPANY CLOSER TO AN OFFSHORE PSA FOR 
GAS DEPOSITS 
 
REF: ASHGABAT 462 
 
¶1.  (U) Sensitive but unclassified.  Not for public Internet. 
 
¶2.  (SBU) SUMMARY:  On April 16, RWE AG, a German energy company and 
Nabucco shareholder, signed a Memorandum on Long-term Cooperation 
with the Turkmen Government.  The Memorandum stipulates that RWE 
will support the Government in training Turkmen engineers and 
introducing new technologies to the country's energy sector.  It 
also specifies that the two sides will start negotiating a 
production sharing agreement (PSA), which will make it possible for 
RWE to explore and develop Block 23 located in Turkmenistan's part 
of the Caspian Sea.  According to the Memorandum, the Government and 
RWE will also negotiate a long-term contract for the sale and 
purchase of Turkmen gas. END SUMMARY. 
 
¶3.  (SBU) Yagshygeldi Kakayev, Director of the State Agency for 
Management and Use of Hydrocarbon Resources ("State Agency"), and 
RWE AG's Chairman of the Board Jurgen Grossman signed the Memorandum 
on April 16 at the Presidential Palace in President Berdimuhamedov's 
presence.  After the signing ceremony, President Berdimuhammedov and 
key government officials accompanied RWE representatives to the 
Ahalteke Horse Breeding Center near Ashgabat, where they spent more 
than four hours watching horses and stunt riders on horseback. 
 
¶4.  (SBU) Embassy sources close to Turkmenistan's energy sector 
suggested that RWE managed to win the Turkmen Government's favor 
with the help of a fellow German firm, Siemens AG.  Siemens has been 
successfully doing business in Turkmenistan since the mid-nineties, 
supplying Turkmenistan with high tech goods ranging from medical 
technology to surveillance equipment.  An official from the State 
Agency mentioned in a meeting with Embassy staff that a decision in 
principal has already been made to allow RWE to develop Block 23. 
According to this source, the PSA will be signed as soon as the two 
sides finalize some details and agree on their respective shares of 
the production.  The official refused to provide detailed 
information about Block 23, such as the presence and extent of oil 
and/or gas deposits, citing confidentiality. 
 
¶5.  (SBU) COMMENT:  The presence of the gas sale and purchase 
provision is an intriguing part of the memorandum.  It is not clear 
that the block in question contains gas deposits and the gas in 
question could be sourced elsewhere in Turkmenistan.  Moreover, the 
parties' motives for including it may be at odds.  For RWE, a 
Nabucco shareholder, its interest is to secure access to Turkmen gas 
for export to the European markets.  On the other hand, the Turkmen 
side may view the nonbinding provision as a means of increasing its 
leverage in negotiations with Gazprom, especially in the context of 
the recent pipeline explosion (reftel). 
 
¶6.  (SBU) COMMENT CONTINUED:  The high-level attention paid to the 
RWE representatives suggests that the decision to work with RWE was 
made by the President himself.  Nonetheless, the devil is in the 
details, and only time will show the real goals behind this 
Memorandum and to what extent it will be implemented.  If RWE signs 
a PSA, it will become the seventh foreign company holding a license 
for exploring and developing hydrocarbon deposits in Turkmenistan. 
The other six are:  Petronas (Block 1), Dragon Oil (Block 2), Buried 
Hill Energy (Block 3), Maersk Oil jointly with Wintershall and ONGS 
Mittal Energy Ltd.  (Blocks 11,12), Burren Energy (Nebitdag 
Contractual Territory), and Chinese National Petroleum Corporation 
(Bagtyarlyk Contractual Territory).  END COMMENT. 
 
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