TURKMENISTAN: CONOCO-PHILLIPS TESTING THE WATERS

UNCLAS ASHGABAT 000997 SIPDIS SIPDIS SENSITIVE STATE FOR SCA/CEN, EEB PLEASE PASS TO USTDA DAN STEIN E.O. 12958: N/A TAGS: PGOV PREL ENERG EPET TX SUBJECT: TURKMENISTAN: CONOCO-PHILLIPS TESTING THE WATERS ¶1. (U) Sensitive but unclassified. Not for public Internet. ¶2. (SBU) Conoco-Phillips is looking at the feasibility of opening an office in Ashgabat, the company's General Counsel for Upstream Finance, Chuck Ferree, told Pol/Econ Chief on September 19. Ferree said he was doing research into the requirements for opening an office, as well as on tax, legal, accounting and other requirements, in addition to the practical aspects of doing business. While in Ashgabat he hoped to look for local contacts for assistance on computing, telecommunications, locating office space, transportation, translation services, etc. So far, he had not found anything suitable. ¶3. (SBU) Ferree said that Conoco-Phillips would open an office only if it gets a deal. Currently, the company is negotiating with the Turkmen government to explore offshore and, in combination with Lukoil, has bids on three blocks in the Caspian - 18, 20, and 21. Ferree was not doing any negotiating on this trip. ¶4. (SBU) Ferree revealed that the company has run into some early problems in setting up an office. In order to get a local mailbox (a prerequisite),there has to be a local representative, who then registers with the tax authorities and other ministries. The first person the company identified, Ferree said, was not acceptable to the Turkmenistan government. (NOTE: Ferree did not say who the person was or why the government rejected him. END NOTE.) ¶5. (SBU) COMMENT: Businesses active here tell us that, despite the president's stated interest in attracting more foreign investment, the registration process remains complicated and encumbered by excessive bureaucratism. Conoco became active here in Turkmenistan much later than many of its competitors, and as a result, is much further behind the curve than Chevron, which has been much more aggressive in setting up shop here. It may take a long time for Conoco to locate suitable office space, although the Turkish company Yimpas has just completed an office building, which may be appropriate. Post will continue to work with U.S. businesses in hopes that a larger western business presence will lead, over time, to improved conditions for all. CURRAN