TURKMENISTAN: MAJOR INTERNATIONAL OIL PLAYERS

1. (U) Sensitive but unclassified. Not for public Internet.



2. (U) With the Turkmen International Oil and Gas
Exhibition less than two weeks away, post provides the
following compendium of the major foreign companies
cooperating with the Turkmen government on oil exploration
and development, with some updated facts and figures on their
efforts to develop the sector. A variety of international
companies continue to develop or operate the contract areas
of the five major production sharing agreements (PSAs), both
offshore and on Turkmen territory. We have excluded the
China National Oil Company from this report.

CHELEKEN



3. (U) Cheleken is an offshore contract area operated by
Dragon Oil (UAE/UK ownership). The area is composed of two
Soviet-era oil fields, Jeitun and Jygalybeg, which are
located in shallow water. Dragon Oil has invested some $760
million, including $200 million in just the last two years,
producing over four million tons of oil. Dragon Oil's
priority has been the refurbishment of the infrastructure at
its two fields. The company has a 25-year PSA with the
government to work at these fields. The company projects it
will produce about 1.6 milllion tons of crude. Dragon Oil
ships its oil under swap agreements via ports in Iran. Minor
volumes are also shipped to Baku. In June, Dragon Oil
commissioned a new $25 million oil production and storage
facility (NPSF) with an annual capacity of 2.5 million tons.

OFFSHORE BLOCK 1



4. (U) Petronas (National Malaysian Petroleum Corporation)
signed a 25-year PSA to develop Block 1 in 1996. The block
includes the Magtumguly, Ovez, and Diyarbekir fields.
Diyarbekir began production in 2006. In 2007, Petronas
expects to produce about 300,000 tons of crude. Petronas
discovered major gas reservoirs that would also allow the
company to produce up to 10 bcm by 2010. Since 1996,
Petronas has invested more than $700 million. In 2006,
Petronas brought a mobile offshore production unit (MOPU) and
a Floating Storage and Offloading system (FSO) into the
country. In the village of Kiyanly, north of Turkmenbashi,
Petronas is building a gas treatment plant at a cost of about
$500 million. The company plans to transport its gas onshore
for treatment. When operational, the facility will be able
to process 10 bcm per year. Construction is due to be
completed in Spring 2010.



5. (U) Also in Kiyanly, Petronas is building a $60 million
platform fabrication facility. The MDP-A (Magtumguly
Drilling Platform) will be installed in November 2007.
Petronas is currently dredging a channel to deliver the
platform. A drilling rig, to be installed on MDP-A, is on
standby. Petronas subcontractor, MMHE is transporting large
sections of the platform via the Volga-Don Canal and is
assembling them in Kiyanly.

OFFSHORE BLOCKS 11 AND 12



6. (U) The Danish firm Maersk originally explored these
blocks alone after signing a PSA in 2002. After becoming
disappointed with seismic and other exploration results, it
sold a 20 percent interest in the blocks to the German
company Wintershall, and a 30 percent interest to India's
ONGC Mittal Energy in 2007. The consortium is not yet in the
production phase.


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NEBIT DAG



7. (U) The British oil company Burren has a PSA in western
Turkmenistan for three operating oil fields, Burun, Balkan
and Uzboy. These fields have been producing a modest 23,000
barrels per day. Burren has been the operator of the PSA
since 2000. From 1996-2000, the company held a 25 percent
interest in the PSA along with Mobil and the British firm
Monument. Post estimates that Burren has invested over $300
million in the development of this PSA.

KHAZAR



8. (U) The Austrian-registered Mitro, formerly known as
Pado Oil, signed a 25-year PSA in 2000 for this onshore
contract area. Mitro formed a consortium with Turkmennebit
State Concern to develop the area where Turkmennebit serves
as the operator. According to Pado's original plan, the
company was to have invested around $135 million. The
consortium has produced about two million tons of oil thus
far.



9. (SBU) COMMENT: International hydrocarbon firms continue
to invest actively on a large scale to overhaul old
production fields and facilities while also building new
state-of-the-art facilities. The companies that have put
down roots here will be well-represented at the oil and gas
exhibition, and have been aggressively advocating their
interests with President Berdimuhamedov while he considers
Turkmenistan's next steps on hydrocarbon development.
Berdimuhamedow, however, has demonstrated that he is open to
contract discussions with both old and new players, so expect
the competition to continue. END COMMENT.
HOAGLAND