CHEVRON PREPARING TO OPEN FOR BUSINESS IN

UNCLAS ASHGABAT 000749

SIPDIS

SENSITIVE
SIPDIS

STATE FOR SCA/CEN, EEB; COMMERCE FOR HUEPER; ENERGY FOR
EKIMOFF

E.O. 12958: N/A
TAGS: PREL EPET EINV ECON TX
SUBJECT: CHEVRON PREPARING TO OPEN FOR BUSINESS IN
TURKMENISTAN



1. (U) Sensitive but Unclassified -- not for public Internet.


2. (SBU) SUMMARY: During a July 26 meeting, Chevron's
Director of Business Development for the CIS, Gerry Harris,
told A/DCM that his company had just submitted two proposals
to Turkmenistan's State Agency for Hydrocarbon Management and
Use -- one for a block under dispute by Azerbaijan and
Turkmenistan (a subsequent article confirmed it was the block
containing Kyapiz/Serdar island),and one for a gas field in
eastern Turkmenistan. Although the embassy has been told
that Burried Hill and Lukoil are also interested in the same
block, Chevron is already setting up an office in
Turkmenistan. This represents the first serious bid by a
world-class western company since ExxonMobil left in the
1990's. END SUMMARY.


3. (SBU) During a July 26 meeting with A/DCM that was meant
to discuss how the embassy might more effectively assist
Chevron executives with future visits to Turkmenistan, Gerry
Harris, Chevron's Director of Business Development in the
CIS, who accompanied the local representative, Alexander
Zaits, informed post that Chevron has identified a building
for an Ashgabat office and is ready to sign a lease. Chevron
believes that it will have a completely operational office
staffed with expats in two to three months. Over the next
month, Chevron will send a series of assessment teams to
evaluate housing, education, medical facilities and security.


4. (SBU) Earlier that day, Chevron said, it had also
presented two proposals to the State Agency for Hydrocarbon
Management and Use ("State Agency"):

-- To develop a discovery in the Southern Caspian, located in
a disputed area. (NOTE: A Platt Commodity report later
reported that Chevron executive Ian MacDonald had stated that
Chevron had bid on the block containing Kyapaz/Serdar island.
END NOTE.) Chevron said it has already informed SOCAR that
it is pursuing a deal with Turkmenistan in the disputed area
"so there are no surprises." Chevron has also pointed out to
SOCAR that the lack of Caspian delimitation is not a barrier
for it to start developing disputed area fields.

-- To develop a gas field in eastern Turkmenistan. Chevron
indicated that PDAS Mann,s efforts helped make
Turkmenistan's government more receptive to this offer.


5. (SBU) Chevron has also launched a training program for
the State Agency and flew in an economist from California for
the first two-hour economics class, which dealt with
investment practices and how western oil and gas companies
work. The State Agency was very interested in the course and
asked whether the economist could come back to offer a
week-long seminar. Chevron told A/DCM that it will continue
this program.


6. (SBU) COMMENT: Canada's Burried Hill completed the first
round of negotiations for this same block in June, and
Lukoil/ConocoPhillips is rumored to also be interested in
this area (ConocoPhillips plans to visit August 8, if it can
get the needed letters of invitation),which oil experts have
indicated shares the same seismics as the Petronas block to
the east. The State Agency has already stated that it will
not entertain any exclusive offers during the bidding phase.
With the most recent phase of delimitation talks just
completed between Turkmenistan and Azerbaijan with an
agreement to continue talks, some world-class petroleum
companies seem to feel that the atmosphere is right to
re-enter Turkmenistan, which has been without major petroleum
companies since ExxonMobil exited the scene in the 1990's.
END COMMENT.
HOAGLAND