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