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DE RUEHAH #1563/01 3381214
ZNR UUUUU ZZH
P 041214Z DEC 09
FM AMEMBASSY ASHGABAT
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UNCLAS SECTION 01 OF 02 ASHGABAT 001563 
 
SENSITIVE 
 
SIPDIS 
 
STATE FOR SCA/CEN; EEB; NEA/IR 
ENERGY FOR EKIMOFF/BURPOE/COHEN 
COMMERCE FOR EHOUSE 
 
E.O. 12958: N/A 
TAGS: EPET PGOV EINV TX
SUBJECT: TURKMENISTAN: LOTS OF GAS, BUT WHAT ABOUT OIL? 
 
REF: ASHGABAT 798 
 
ASHGABAT 00001563  001.2 OF 002 
 
 
¶1. (U) Sensitive but unclassified.  Not for public Internet. 
 
¶2. (SBU) SUMMARY.  Annual oil production in Turkmenistan has 
varied from 9 to 10 million tons for the past six years, but 
the Turkmen Government has announced plans to increase the oil 
production to 50 million tons by 2020.  Turkmenistan consumes 
about 6 million tons locally and exports the rest through Iran 
and Georgia.  Turkmenistan refines oil into gasoline, 
polypropylene, and motor oil at the country's two oil 
refineries.  Turkmenistan's proven oil reserves are estimated 
to be 100 million tons.  Although the government has ambitious 
plans to increase oil production and become a serious player 
in the oil market, oil output is unlikely to significantly 
increase if no new large oil fields are discovered in the near 
future.  END SUMMARY. 
 
¶3. (SBU) Natural gas is by far Turkmenistan's most important 
natural resource, but oil also has strategic importance for 
the country.  Turkmenistan relies on revenue from oil exports 
during periods when gas exports decrease or there is a 
disruption, as is the case with the current gas dispute with 
Russia.  Moreover, oil production plays a significant 
political role within the country, as the GOTX considers 
subsidized gasoline as a crucial means to maintain stability 
in the country.  Currently, every car owner receives 120 
liters (about 32 U.S. gallons) of gasoline free-of-charge each 
month and can purchase additional gasoline for about USD 0.22 
per liter. 
 
¶4. (SBU) Although current oil production and reserves are 
sufficient to meet local consumption for years ahead, the top 
leadership of the Turkmen oil industry seems serious about 
increasing the country's oil output.  The oil industry 
leadership's efforts to increase oil production are driven by 
goals set in the National Program for Oil and Gas Industry 
Development, which envisages that oil production will reach 50 
million tons by 2020 and 100 million tons by 2030.  Turkmen 
oil officials take compliance, or at least visible efforts to 
comply with these National goals, very seriously, given that 
their careers often depend on meeting such national goals. 
 
¶5. (SBU) Turkmenistan produces most of its oil in the 
country's southwest region in a number of oil fields located 
on a 70-kilometer wide strip of land stretching along the 
Caspian coast.  The country's largest oil fields -- Goturdepe 
and Barsagelmez -- were discovered during Soviet times and 
their production peaked in the 80s, but they still provide 
about 35 percent of the country's total oil output.  A number 
of smaller fields in that area were also discovered during the 
Soviet era and peaked in the 80s and 90s.  The Turkmennebit 
State Concern that operates those fields has to rely 
increasingly on the gas lift method of operation to maintain 
the current rates of oil production.  Using this method 
usually indicates that an oil field has already passed its 
peak production. 
 
¶6. (SBU) Turkmennebit has also started extracting oil from 
small fields located in the central part of the country 
(reftel) in an effort to meet the goals of the National 
Program.  The Turkmen Government has signed a number of 
production sharing agreements with foreign companies to 
develop mostly offshore oil fields.  Although foreign 
companies working under PSAs are gradually increasing their 
production, this factor is unlikely to significantly improve 
total oil production statistics, and there are no grounds to 
believe at this point that there will be any major offshore 
fields discovered in the near future.  Turkmenistan also gets 
 
ASHGABAT 00001563  002.2 OF 002 
 
 
a share of the oil produced in the Yashyldepe-Kokdumalak oil 
field, located on the Turkmen-Uzbek border and operated by an 
Uzbek national oil company. 
 
¶7. (SBU) The Turkmen Government is currently considering two 
possibilities to increase oil production in the short and 
midterm.  According to a Ministry of Oil and Gas expert, the 
top management of the oil industry is looking into options for 
bringing state-of-the-art well stimulation technologies to the 
country.  Well stimulation technologies will allow 
Turkmennebit to increase oil output from currently developed 
fields in the short term. 
 
¶8. (SBU) According to the Ministry official, Turkmennebit is 
most interested in cooperating with scientific institutes 
rather than with oil field service companies on well 
stimulation projects.  The expert asserted that ideally the 
GOTX would like to bring in highly qualified engineers and 
scientists who would apply new well simulation technologies 
while simultaneously training Turkmennebit engineers in 
applying the technologies.  In other words, the Turkmen oil 
and gas sector management would like to acquire technologies 
instead of purchasing services.  As for the mid and long term, 
Turkmen geologists believe that new producing layers can be 
discovered in southwestern Turkmenistan at depths below 4,000 
meters.  The Government is expected to intensify exploration 
drilling in that area starting with drilling deeper wells at 
the oil fields that are under exploration now. 
 
¶9. (SBU) COMMENT: Although well stimulation technologies 
increase the rate of oil recovery from a reservoir to some 
extent, the chief advantage of these technologies is that they 
allow for pumping oil out of the reservoir faster than regular 
technologies do.  If Turkmennebit widely applies well 
stimulation technologies to its fields, some Turkmen 
geologists believe that Turkmenistan will see an increase of 
oil production for the next five to seven years, or until the 
oil fields are depleted to such an extent that even well 
stimulation technologies won't help.  If no new oil fields or 
new producing layers in the old fields are discovered, the 
Turkmen oil industry will see a gradual and inevitable 
decrease of oil production that will come in direct conflict 
with national oil production goals for 2020 and 2030.  END 
COMMENT. 
 
ECKSTROM