VZCZCXRO7019
RR RUEHIK
DE RUEHAH #1328/01 2951158
ZNR UUUUU ZZH
R 221158Z OCT 09
FM AMEMBASSY ASHGABAT
TO RUEHC/SECSTATE WASHDC 3635
INFO RUCNCIS/CIS COLLECTIVE
RUCNMEM/EU MEMBER STATES COLLECTIVE
RUCNCLS/ALL SOUTH AND CENTRAL ASIA COLLECTIVE
RHMCSUU/CDR USCENTCOM MACDILL AFB FL
RUEAIIA/CIA WASHDC
RHEFDIA/DIA WASHDC
RHEHNSC/NSC WASHDC
RUETIAA/NSA FORT MEADE MD
RUEKJCS/JOINT STAFF WASHDC
RUEKJCS/SECDEF WASHDC

UNCLAS SECTION 01 OF 02 ASHGABAT 001328 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR SCA/CEN, EUR/ACE, EEB 
AID/W FOR EE/EA 
 
E.O. 12958: N/A 
TAGS: PGOV PREL EAID TX
SUBJECT: TURKMENISTAN: STATE HYRDOCARBON AGENCY HEAD ASKS FOR 
USAID'S ASSISTANCE ON RANGE OF SUBJECTS 
 
ASHGABAT 00001328  001.2 OF 002 
 
 
¶1.  (U) Sensitive but unclassified.  Not for public Internet. 
 
¶2.  (SBU) SUMMARY: After waiting since early August for an October 
20 meeting to discuss potential cooperation on introducing 
International Financial Reporting Standards (IFRS) with funding from 
the USAID-Chevron public-private partnership, the State Agency for 
Management and Use of Hydrocarbon Resources (State Agency) Director 
spoke glowingly of past cooperation with USAID and said that there 
were many other potential areas for joint work.  Training courses 
focused on project management, international models for production 
sharing agreements (PSAs) and service contracts, establishing 
representative offices abroad, and business planning for state 
entities were among the opportunities suggested in addition to the 
urgent IFRS work.  Kakayev promised to provide a list of the State 
Agency's interests and proposed to meet again after the upcoming 
Independence Day holidays (October 27-28) to review the options. 
END SUMMARY. 
 
INITIAL MEETING DELAYED SINCE AUGUST 
 
¶3.  (U) On October 20, USAID Country Representative, Chevron 
Nebitgaz President and a representative of USAID's Economic Reforms 
to Enhance Competitiveness (EREC) project met with the State Agency 
for Management and Use of Hydrocarbons Resources Director, 
Yashigeldy Kakayev, to discuss potential cooperation on introducing 
International Financial Reporting Standards (IFRS) with funding from 
the USAID-Chevron public-private partnership.  (NOTE: Chevron 
recently provided $500,000 to USAID to launch the first-ever 
Public-Private Alliance in Turkmenistan.  The program will allow 
USAID to expand or extend three ongoing programs.  END NOTE.)  The 
proposed meeting had been postponed several times prior to receiving 
a half-hour's advance notice on October 20. 
 
¶4.  (U) After USAID provided an overview of USAID's activities in 
Turkmenistan, Chevron Nebitgaz's president highlighted the company's 
community development philosophy and explained Chevron's objectives 
for the company's alliance with USAID in Turkmenistan.  The 
USAID/EREC representative then introduced the project's ongoing 
activities in Turkmenistan, including those supporting IFRS 
implementation. 
 
PROPOSAL FOCUSED ON IFRS TRAINING FOR HYDROCARBON SECTOR 
 
¶5.  (U) The USAID-Chevron proposal included a series of Certified 
Accounting Practitioner (CAP) training courses for State Agency and 
other oil and gas sector specialists and accountants, and assistance 
with developing a strategy for the implementation of IFRS in the oil 
and gas sector, including the development of IFRS-compliant 
financial statements for the State Agency.  USAID/EREC shared the CV 
for the proposed expert to assist in strategy development and 
informed Kakayev that the expert, a Kazakh national, is scheduled to 
make a presentation on IFRS implementation in the oil and gas Sector 
during the Oil and Gas of Turkmenistan Conference in Ashgabat in 
mid-November.  (NOTE: He is using one of Chevron's two speaking 
slots as a sponsor.  END NOTE.) 
 
¶6.  (U) In response to the presentation, Kakayev said that the 
proposed work was urgent.  He welcomed USAID-Chevron's contributions 
in this area, and said that assistance preparing the State Agency's 
own IFRS-compliant financial statements, as required by the new 
Hydrocarbons Law, would be helpful.  The State Agency was required 
to do this despite the fact that the Ministry of Finance has not 
developed national accounting standards harmonized with 
international standards.  In preparing IFRS-compliant financial 
statements, the State Agency currently referred to input and advice 
by international contractors operating in Turkmenistan, but the 
State Agency was not sure whether the approach was actually right or 
wrong.  Kakayev also asked that the training courses be organized on 
the State Agency's premises. 
 
WHY STOP HERE -- CAN WE DISCUSS OTHER COOPERATION? 
 
¶7.  (U) In addition to the proposed IFRS-related training, Kakayev 
also asked if USAID could provide assistance in other areas, 
including: 
-- Developing rules on deposit development; 
-- Developing and/or updating of various (unspecified) legislative 
 
ASHGABAT 00001328  002.2 OF 002 
 
 
documents and regulations; 
-- Business plan development; 
-- Establishing oil companies in Turkmenistan according to 
international models, including PSA and service companies; 
-- Building capacity in project management; 
-- Improving the operations of the State Agency's existing 
representative offices abroad, as well as those yet to be opened. 
 
¶8.  (U) Kakayev offered to provide a list of specific areas for 
potential cooperation.  He repeated that any training courses, 
especially those in the project management area, should be tailored 
for a government agency since the State Agency is state-owned.  At 
USAID's request, Kakayev provided a contact person at SAMUHR, and 
reiterated that the State Agency would provide a list of areas for 
cooperation.  As a next step, Kakayev suggested to meet again in 
early November after the Independence Day holidays (October 27-28) 
to discuss further activities as part of technical assistance. 
 
¶9.  (U) Kakayev stressed that the State Agency welcomed cooperation 
with USAID.  He spoke favorably of the extensive cooperation that 
USAID enjoyed in the 1990's with the State Agency's predecessor, the 
Competent Body, and lamented that cooperation with the oil and gas 
sector was downscaled in order to move to the agriculture sector. 
(NOTE: Personnel changes in the oil and gas structures also played a 
major role in the strategic re-orientation. END NOTE.) 
 
¶10.  (SBU) COMMENT: The wait for this meeting appears to have been 
worth it.  Kakayev spoke positively of past cooperation with USAID 
and expressed hope that this cooperation could be re-established. 
Chevron Nebitgaz is also interested in responding to some of the 
requests, which will help build its relations with a key sector 
counterpart.  That Kakayev provided a contact person at the State 
Agency to follow up with indicates his seriousness.  The next test 
will be to see if the offered list of possible areas for cooperation 
is forthcoming.  If extensive joint activities are requested, 
current funding will not support a comprehensive response.  END 
COMMENT. 
 
CURRAN