OIL EXPATS: GOTX OIL POLICY DYSFUNCTIONAL, BUT

C O N F I D E N T I A L ASHGABAT 000161

SIPDIS

SIPDIS

SECSTATE FOR EUR DAS BRYZA, EUR/CACEN, SA DAS GASTRIGHT

E.O. 12958: DECL: 02/01/2016
TAGS: ECON EFIN ENRG EPET PGOV TX
SUBJECT: OIL EXPATS: GOTX OIL POLICY DYSFUNCTIONAL, BUT
WE'LL HANG ON

REF: ASHGABAT 144

Classified By: AMBASSADOR TRACEY ANN JACOBSON FOR REASONS 1.4 (B),(D)


1. (SBU) A half-dozen of Ashgabat,s long-time oil-patch
and other expat observers gave us their views on
Turkmenistan,s oil/government scene over lunch January 27.
The emphatic consensus was that GOTX channels for getting oil
business done have become more dysfunctional than ever, with
nil prospects for improvement. All admitted their operations
were feeling acutely squeezed. Yet there was also apparent
accord that, albeit the worsening climate will put off new
Western oil ventures here, operations which are already
rooted will stay, because pulling up stakes for them is not
an option and fallow periods are a precondition for the big
profits anyway.


2. (C) Maersk,s General Manager said he has &never seen a
government try so hard8 to make foreign investors and
companies unwelcome. He spoke of the amount of time he has
to spend with different government agencies just to enable
his company to do the work it is here for. All agreed that
with the closure of the Competent Body and the removal of Oil
and Gas Deputy Chairman Yolly Gurhanmuradov last year, there
is now no GOTX mechanism or individual POC from whom
companies can hope to get permissions or decisions. Requests
essential for operations and production go into &limbo.8


3. (SBU) The Merhav Rep said his company (in-country since
1994) had not been paid for the entire last year. Yet he was
unfazed by this, characterizing one of his responsibilities
as being to remind his company that such is the way of doing
business in Turkmenistan. The latter offers lucrative
projects; one must accept and wait through the slow times to
take advantage of the super-profitable opportunities when
circumstances ripen, in his words. Ebbs and flows in
relations with the GOTX are par for the course. There was
general nodding. Bertling's ethnic-Turkish Amcit Managing
Director, as always, emphasized the potential for
businesspeople who are patient and willing to do things
according to local ways. The oil and gas companies meet as
a group to discuss their shared challenges: a collective
approach with the GOTX is imperative to being able to
continue working in Turkmenistan.


4. (C) Niyazov/Putin: Regarding strategic trends in the
Central-Asian regional energy scene, all comments were deeply
pessimistic. The EU (Tacis) Rep didactically opined that
Niyazov,s January 23 meeting with Putin had officially
sealed the deal for Russia to get effectively all
Turkmenistan,s natural-gas exports henceforth. Others at
the table demurred at the timing of this thesis, but none at
its thrust. All took it as a given that Niyazov is
physically terrified of being cast into Moscow,s ultimate
disfavor. Someone argued that Niyazov,s old precondition of
a billion-dollar fund for constructing a TCP was because he
has real cause to fear that Moscow would cut off his gas
exports were he to opt for a TCP: without a reserve of cash
to tide over GOTX social payments until the TCP was up and
running, he would surely topple .


5. (SBU) We solicited observations on Niyazov,s brutal
scale-back of pensions (Reftel). All our guests believed he
had taken the step because the GOTX budget is utterly empty.
Agreeing that the pension measure's social impact was
extraordinarily harsh, a couple suggested that it was an
egregious case of incompetent and craven subordinates
scrambling to carry out Niyazov,s order for a fiscal cutback
without daring to alert him to the details and consequences.
They suggested Niyazov might eventually reverse the cutbacks.
In any case, no-one foresaw any active social protest.
JACOBSON