TURKMENISTAN'S OIL AND GAS CONFERENCE "THE WORST

UNCLAS SECTION 01 OF 02 ASHGABAT 001011

SIPDIS

SENSITIVE
SIPDIS

STATE FOR SCA/CEN (PERRY)

E.O. 12958: N/A
TAGS: EPET ECON PREL TX
SUBJECT: TURKMENISTAN'S OIL AND GAS CONFERENCE "THE WORST
EVER"

Summary
--------------


1. (SBU) Ashgabat's 11th annual oil and gas conference
yielded few surprises for delegates who, generally, were
disappointed with the conference. With a proclaimed emphasis
on international cooperation opportunities, presentations
attempted to lure foreign firms to Turkmenistan's Caspian Sea
waters with claims of 11 billion tons of oil and 5.5 trillion
cubic meters of natural gas resting offshore. Amidst plans
for natural gas reservoir development and in place reserve
estimates of 22.6 trillion cubic meters, Chinese firms remain
active in Turkmenistan's oil and gas sector. End Summary.

Gathering the Oil and Gas Faithful
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2. (U) Under the aegis of the Ministry of Oil and Gas and
the Chamber of Commerce, Ashgabat hosted the 11th
international "Oil and Gas of Turkmenistan" conference
September 20-21. Oil and Gas Minister Gurbanmyrat Atayev
presided over many sessions of the conference, which drew
approximately 600-800 people to the opening session. Roughly
a third to one-half of the attendees failed to return for the
second morning session. As a result, vacant seats in
subsequent sessions were filled with students and other
recruits.


3. (SBU) Most speeches resonated with praise for previous
oil and gas sector developments and past cooperation during
the Soviet era. Among the more detailed presentations, a top
tax official failed to provide fresh insights into the
Petroleum Law, under which foreign firms operate in
Turkmenistan's oil and gas sector. Ukrainian speakers, led
by First Deputy Minister of Fuel and Energy (and former
ambassador to Turkmenistan, serving a record ten years from
1995-2005) V. P. Chuprun, stressed historical ties between
Ukraine and Turkmenistan and heaped great praise on
Turkmenistan President Niyazov and his book, the Ruhnama.
Ukrainian Embassy Counselor Olha Timush later expressed her
doubts to emboff that the Ukrainian speeches would spark a
future natural gas deal directly between Ukraine and
Turkmenistan.

Glimmers in the Caspian Sea
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4. (SBU) In contrast to the general nature of most speeches,
State Agency on Caspian Sea Issues Hoshgeldy Babayev
encouraged offshore development activities with foreign firms
in his detailed overview of prospects in Turkmenistan's
waters in the Caspian Sea. Citing the 120 wells drilled in
Turkmenistan's waters and seismic studies conducted "by
Turkmenistan explorers from 1956 to 1994" covering 77,000
linear kilometers, Babayev claimed Turkmenistan's waters held
11 billion tons of oil and 5.5 trillion cubic meters of
natural gas. In a subsequent discussion with emboff, a
Buried Hill representative, whose firm has the rights to
develop the Serdar concession along the disputed sea boundary
between Azerbaijan and Turkmenistan, disagreed with Babayev's
characterization of available survey data. "We are
conducting research," he said, "but the old survey data are
in Azeri hands, and they are not sharing survey information
with Turkmenistan."


5. (U) Citing offshore operations by Dragon Oil, Petronas
and Maersk Oil/Wintershall, Babayev highlighted
Turkmenistan's plans to license a total of 30 offshore blocks
through production sharing agreements (PSAs). (Note:
Wintershall is apparently in the process of acquiring
offshore blocks 11 and 12 from Maersk. End Note.) Babayev
claimed that more than 20 foreign firms had received data
packages or supplementary seismic information, and noted that
six firms, including companies from Canada, Germany, the
Netherlands and Russia, were discussing PSAs with
Turkmenistan. Although Russia's Lukoil, Ukraine's Naftogaz,
Malaysia's Petronas and Russia's Gazprom had large exhibits
on the sidelines of the conference, no major western energy
concerns participated in the exhibit.

Spotlight on Gas
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6. (U) State Gas Concern "Turkmengaz" Chairman Bagtyar
Hajygurbanov claimed that Turkmenistan's in place natural gas
reserves amounted to 22.6 trillion cubic meters. He added
that up to 100 natural gas wells would be overhauled
annually. A few days later a Chinese engineer appeared on a
local television station and announced that his firm was
rehabilitating 40 wells at the massive Dovletabad field in
southwestern Turkmenistan. Hajygurbanov outlined planned
annual production figures of 4 billion cubic meters (bcm) for
the Garabil-Gurukbil fields (near Dovletabad),40 bcm for the
Yoloten field and 30 bcm for fields on the right bank of the
Amu Darya. (Comment: The Amu Darya figure matches nicely
with pledges made to China regarding future natural gas
supplies. Chinese activity in Dovletabad, however, could
presage the utilization of other fields to meet the Chinese
quota. End Comment.)

Reality Check
--------------


7. (SBU) At a British embassy reception following the
conference, veterans of previous Ashgabat oil and gas
conferences declared the content of this year's event to be
"the worst" they have seen. A visiting British advisor
expressed total disappointment with the conference, while a
Total Oil representative ascribed the lack of content to
possible "incompetence" among many speakers. Another western
attendee remarked that Minister Atayev dodged several
questions she had submitted, and noted that Atayev's
assistant told her "to read the newspaper for answers" to her
questions. A speaker, who raised Atayev's eyebrows with his
presentation on alternative uses for sulfur, had difficulty
identifying useful components of the conference.

Comment
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8. (SBU) While the conference made excellent fodder for
Turkmenistan's media outlets, the conference did not
appreciably advance the stated goal of outlining "priorities
for development and international cooperation opportunities"
as planned by the organizers. Speakers seemed reluctant to
build on their prepared remarks and virtually ignored the
recent Gazprom natural gas deal and natural gas pipeline
expansion as possible talking points for future international
cooperation. Although government figures on reserves are
questionable, they provide a yardstick for the upper limits
of Turkmenistan's actual reserves. Embassy did not sponsor a
booth this year, for the first time in years and is unlikely
to do so in the future. End Comment.
BRUSH