TURKMENISTAN'S HYDROCARBON AGENCY: "HELP!"

UNCLAS SECTION 01 OF 02 ASHGABAT 000865 SIPDIS SENSITIVE SIPDIS STATE FOR SCA/CEN, EUR/ACE, EEB PLEASE PASS TO TDA DAN STEIN E.O. 12958: N/A TAGS: PGOV PREL EAID EPET TX SUBJECT: TURKMENISTAN'S HYDROCARBON AGENCY: "HELP!" REF: ASHGABAT 0728 ¶1. (U) Sensitive but unclassified. Not for public Internet. ¶2. (SBU) SUMMARY: In a remarkable meeting with EEB Assistant Secretary Sullivan, Turkmenistan's top energy negotiator, who is close to Berdimuhamedov, made crystal clear he is feeling overwhelmed by his responsibility and lack of institutional capacity. Turkmenistan's policy is clear: it wants Western companies and wants to export to the West. But it needs help. Septel will make recommendations. END SUMMARY ¶3. (SBU) EEB Assistant Secretary Daniel Sullivan told State Agency for Hydrocarbon Resources Executive Director Bayrammyrat Myradov on August 14 that diversification of energy flows supports Turkmenistan's neutrality policy. The United States has a strong interest to invest not only in the Caspian but also on-shore. We bring world-class experience, technology, and training. Upstream investment opportunities lead to investment in pipelines. OVERWHELMED ¶4. (SBU) Myradov responded, "Very interesting presentation," and then -- to make his point -- tried to recruit the embassy POL/ECON FSN who was translating. He said, "You're young, bright, and have international experience. Come join my team." Myradov made clear his point was that his agency, as well as other parts of the government, is floundering under the onslaught of governments and businesses flocking to Ashgabat because of President Berdimuhamedov's new openness. ¶5. (SBU) Clearly cranked up, Myradov did not hide his frustration. He asked Sullivan, "Do you want a short answer or a long answer to your points? The short answer is I agree with everything you said. That's what we should be doing. My longer answer: where are your concrete proposals? What are the next steps? We really want to diversify our energy exports. You (the United States) have the capability to provide world-class technology, training, and management. We don't have it, and we want it." ¶6. (SBU) Calming down, Myradov said, "We're starting (new cooperation with the West) in the Caspian because those fields are technologically complex. But as I told Ambassador Mann (reftel),we are open to any, I emphasize any, on-shore proposal. But let's start with the Caspian, and that will lead to more. Those companies that succeed off-shore will be able to succeed on-shore." CASPIAN DELIMITATION ¶7. (SBU) Sullivan noted we want to help create the conditions for private-sector development. Also, our offer of technical assistance for Caspian Sea delimitation remains on the table. ¶8. (SBU) The mention of delimitation set Myradov off again. "What are we supposed to do, talk for another 15 years? What technical assistance do you mean? Tell me concretely. I've recently spoken to four different international lawyers on this issue, and each told me something different. Speaking as a citizen, not a bureaucrat, Turkmenistan and Azerbaijan could probably sit down and solve this, but not so long as British Petroleum continues to operate in the disputed area. Let the consortium suspend activity until we get this solved." "WE NEED YOUR HELP" ¶9. (SBU) Sullivan raised the issue of finding ways to transport Turkmenistan's hydrocarbon resources across the Caspian. He asked Myradov about Turkmenistan's timelines for concluding new Caspian and on-shore deals. ASHGABAT 00000865 002 OF 002 ¶10. (SBU) Myradov replied Turkmenistan is already negotiating with several Western companies for Caspian PSA deals. "We want to speed up the negotiations. It's important for serious, big companies to start working in the Caspian." ¶11. (SBU) Then his frustration rose again. "But a quick decision can't mean a wrong decision. Economics is our first priority. But these companies are negotiating from a very pessimistic viewpoint, as if oil is still $10-15 a barrel. To help them minimize their risk, why should we maximize our risk? We seriously tell these companies we want to work to international standards, but at the same time we don't want to be taken advantage of." Looking at Sullivan, Myradov said bluntly, "We are waiting for you to train our staff how to negotiate to international standards. Right now, we are enormously transparent and tell these companies exactly what terms we want. In return, we want them to be open and honest with us. We need your help." Sullivan noted that these kind of negotiations with large American energy companies can seem difficult because they drive hard bargains, but that Myradov should not lose sight of the longer term benefits that American firms will bring, such as world class technology and management training for Turkmen citizens, and access to significant capital for economic development. ¶12. (SBU) Myradov thanked Sullivan for listening patiently and carefully to his views. He added, "All companies are taking us more seriously now because we are talking to Western companies." ¶13. (SBU) COMMENT: This was a valuable meeting, remarkable for its frankness. Myradov, who is close to Berdimuhamedov, is feeling overwhelmed by his responsibility and lack of institutional capacity. Turkmenistan's policy is clear: it wants Western companies, and wants to export to the West. But it needs help, and it needs it soonest. Septel will make recommendations. END COMMENT. ¶14. (U) A/S Sullivan has cleared this cable. HOAGLAND