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DE RUEHAH #1550/01 3380923
ZNR UUUUU ZZH
R 040923Z DEC 09
FM AMEMBASSY ASHGABAT
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INFO RUCNCIS/CIS COLLECTIVE
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RHMCSUU/CDR USCENTCOM MACDILL AFB FL
RUEAIIA/CIA WASHDC
RHEFDIA/DIA WASHINGTON DC//DHO-2/REA/NMJIC-J2//
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RUETIAA/NSA FORT MEADE MD
RUEKJCS/JOINT STAFF WASHINGTON DC//J5/RUE//
RUEKJCS/SECDEF WASHINGTON DC

UNCLAS SECTION 01 OF 03 ASHGABAT 001550 
 
SENSITIVE 
 
SIPDIS 
 
STATE FOR SCA/CEN, EUR/ACE, EEB 
AID/W FOR EE/EA 
 
E.O. 12958: N/A 
TAGS: PGOV PREL EAID EPET TX
SUBJECT: TURKMENISTAN: STATE HYDROCARBON AGENCY SUBMITS 
LIST OF AREAS FOR COOPERATION WITH USAID 
 
REF: ASHGABAT 1328 
 
ASHGABAT 00001550  001.2 OF 003 
 
 
¶1.  (U) Sensitive but unclassified.  Not for public 
Internet. 
 
¶2.  (SBU) SUMMARY: On November 25, USAID received a 
detailed request for technical cooperation from the State 
Agency for Management and Use of Hydrocarbon Resources. 
The requested activities, which will be carried out 
within the framework of USAID's Economic Reforms to 
Enhance Competitiveness (EREC) project and the USAID- 
Chevron Global Development Alliance (GDA), will build 
financial and project management skills among oil and gas 
sector specialists and accountants, and assist the State 
Agency in addressing a range of other licensing, tender 
and procurement issues.  USAID is reviewing the list to 
determine which areas it can respond to rapidly to 
capitalize on this opportunity.  END SUMMARY. 
 
INITIAL MEETING RECALLED POSITIVE PAST COOPERATION 
 
¶3.  (U) In an October 20 meeting to discuss potential 
cooperation on introducing International Financial 
Reporting Standards (IFRS) with funding from the USAID- 
Chevron public-private partnership, State Agency for 
Management and Use of Hydrocarbon Resources (State 
Agency) Director Yagshygeldi Kakayev promised to provide 
a list of areas for cooperation with the State Agency 
after the Independence Day holidays (October 27- 
28)(reftel).  After initially delivering the letter 
directly to USAID/Deloitte on November 13, the State 
Agency agreed to resend the letter through formal 
channels, in accordance with standard Ministry of Foreign 
Affairs protocols. 
 
¶4.  (SBU) The translated text of the letter received by 
Embassy Ashgabat on November 25 follows. 
 
BEGIN TEXT 
 
Proposal of the State Agency for Management and Use of 
Hydrocarbon Resources of the Presidency of Turkmenistan 
to USAID on provision of services 
 
- It is proposed to conduct the training courses on 
project management for the specialists of the Agency (for 
the purposes of execution of controlling activities over 
the activities of Contractors during the conduct of 
Petroleum Operations) at the premises of local IFRS 
Training Center. 
 
- It is proposed to conduct training courses on 
international accounting for the specialists of the 
Agency. 
 
- It is proposed to provide support on development of 
formats of financial reporting and regulations for 
compilation of these financial reports in accordance with 
the requirements of the Law of Turkmenistan "On 
Hydrocarbon Resources" and Production Sharing Agreement. 
 
- We hereby request you to organize the presentations and 
seminars with providing information on international 
 
ASHGABAT 00001550  002.2 OF 003 
 
 
practice for procedures on issuance and formats of 
licensing/permissions documentation (procedures) for the 
execution of Petroleum Operations. 
 
- It is proposed to provide assistance in addressing the 
issue of reviewing currently existing Rules for the 
development of hydrocarbon deposits of Turkmenistan in 
the "golden" age of the Turkmen people taking into 
account problems and issues that have arisen during the 
management of projects. 
 
- It is proposed to provide assistance in the development 
of Unified rules and procedures for conducting tenders 
and/or competitive selection bids, which are set by the 
Agency for Contractors carrying out petroleum operations. 
 
- It is proposed to provide assistance in the development 
of the Regulations for conducting internal and external 
audits of petroleum operations, including through the 
engagement of foreign audit consultants. 
 
- It is proposed to provide assistance in the training of 
personnel on international audit. 
 
- It is proposed to provide assistance in the preparation 
of the Rules or Regulations for the inventory of property 
of the Agency, depreciated assets as part of the 
Agreements (Production Sharing Agreements), which have 
not been transferred to the Agency. 
 
- It is proposed to provide assistance in the development 
of the Rules or Regulations for the determination of 
composition and specifics of accounting and valuation of 
property, the right of ownership for which is transferred 
from the Contractor to the Agency according to the Law of 
Turkmenistan "On Hydrocarbon Resources". 
 
- It is proposed to provide assistance in obtaining 
information on international practice of controlling and 
evaluating the validity/reasonableness of expenses during 
the procurement of goods, equipment, materials and in 
carrying out of petroleum operations. 
 
END TEXT 
 
¶5.  (SBU) COMMENT: In the October 20 meeting, Kakayev 
stressed that the State Agency welcomed cooperation with 
USAID and spoke favorably of the extensive cooperation 
that USAID enjoyed in the 1990's with the State Agency's 
predecessor, the Competent Body.  He welcomed assistance 
preparing the State Agency's own IFRS-compliant financial 
statements, as required by the new Hydrocarbons Law, even 
though the Ministry of Finance has not developed national 
accounting standards harmonized with international 
standards.  Kakayev provided a contact person at the 
State Agency that has been responsive to USAID/Deloitte 
between meetings. 
 
¶6.  (SBU) COMMENT CONTINUED: The list of potential areas 
for cooperation moved quickly through the system to reach 
USAID.  This reflects the State Agency's ability to 
navigate Turkmenistan's often cumbersome bureaucracy. 
USAID is currently reviewing the list of possible joint 
 
ASHGABAT 00001550  003.2 OF 003 
 
 
activities, but might not have sufficient funding to 
support a comprehensive response.  Given limited funds 
for economic growth activities in Turkmenistan, alliances 
with other private sector firms can be a source of 
additional funds.  END COMMENT. 
 
ECKSTROM