TURKMENISTAN: SEANA ENERGY PREPARES ITS OFFER

C O N F I D E N T I A L SECTION 01 OF 02 ASHGABAT 000922 SIPDIS SIPDIS STATE FOR SCA/CEN, EEB PLEASE PASS TO USTDA DAN STEIN E.O. 12958: DECL: 09/05/2017 TAGS: PGOV EINV EPET TX SUBJECT: TURKMENISTAN: SEANA ENERGY PREPARES ITS OFFER REF: A. ASHGABAT 0853 ¶B. SINGAPORE 1592 Classified By: CHARGE RICHARD E. HOAGLAND FOR REASONS 1.4 (B) AND (D) ¶1. (C) SUMMARY: A new international consortium of experts and investors is preparing to bid for the on-shore Yoloten gas field. The two founders of Seana Energy, an intentional consortium, are former but now-disaffected employees of Turkey's Chalik Energy. Seana Energy has significant U.S. participation (ref A) but is registered in Singapore. Seana expects a response to their proposal in October. We are curious why Seana is negotiating directly with Deputy Premier for Gas and Oil Tagiyev rather than with State Agency for the Use of Hydrocarbon Resources Executive Director Muradov. END SUMMARY. ¶2. (C) Seana Energy COO Aziz Karaman and FBR Capital Markets Managing Director AmCit Roger Kennedy briefed Charge at 10:00 pm September 4 on their just concluded meeting with Deputy Premier for Gas and Oil Tachberdi Tagiyev. Kennedy said State Agency Executive Director Muradov had dropped by the meeting, but "only for a hand-shake." ¶3. (C) Seana Energy is an intentional consortium, i.e., a group of businesses and investors assembled to take advantage of new opportunities for international companies in Turkmenistan, mostly based in Ankara, Turkey, but registered in Singapore (refs A and B). Kennedy also represents, in conjunction with FBR, Omegen Ltd. in London, which he described as an international gas and oil licenses trader. ¶4. (C) Kennedy said the September 4 meeting focused on the core portion of the Seana proposal -- development of the on-shore Yoloten natural gas field, for which he said "up to $6 billion investment could be available." He claimed Tagiyev essentially told them, "You have the pole position," because Seana is offering a service-contract proposal, rather than a production sharing agreement, which Turkmenistan has said it does not like. Kennedy also commented Turkmenistan likes the Seana proposal because the investors shoulder the majority of the risk. When Charge asked Kennedy if he has a next-steps time line, he replied Tagiyev asked for a full financing plan within two weeks, and a decision can be expected in October. ¶5. (C) Kennedy said the Turkmenistan side has so far declined to reveal precise data on its natural gas reserves, saying "Show us the money, and we'll show you our gas." Kennedy said he clearly told Tagiyev international investors will want to be assured Turkmenistan offers adequate legal and regulatory systems to guard their investments. ¶6. (C) Kennedy had first expected to meet with President Berdimuhamedov on August 23, and telephoned the Charge from Dubai urgently requesting a "Letter of Information" for the foreign ministry attesting he is an American citizen because his "Gulfstream is ready to take off." The embassy's Consular Section, in consultation with Consular Affairs, provided this document. However, Kennedy never received flight clearance until September 4. He grumbled that Foreign Minister Meredov had blocked him (although he offered no evidence),but when he turned to Tagiyev he got "immediate clearance." ¶7. (C) Kennedy said he is no stranger to international mining and hydrocarbon sectors. His father, Thomas Kennedy, was a founding partner of Kennedy Capital Partners that financed the development of major mining ventures, like Ananconda Copper, in the 1970s. It was from his father's ASHGABAT 00000922 002 OF 002 business, he said, where he learned of the incredible potential investment returns from buying and monetizing licenses. ¶8. (C) COMMENT: We're surprised Seana/FBR are negotiating directly with Tagiyev, rather than with Muradov whose State Agency, we had thought, is directly responsible for licensing agreements. We'd go so far as to wonder if a battle may be shaping up between putative reformers like Muradov and FM Meredov and old guard like Tagiyev. END COMMENT. HOAGLAND