TURKMENISTAN: EXXONMOBIL STILL TESTING THE WATERS

C O N F I D E N T I A L ASHGABAT 001169 SIPDIS STATE FOR SCA/CEN, EEB PLEASE PASS TO USTDA DAN STEIN ENERGY FOR EKIMOFF/THOMPSON COMMERCE FOR HUEPER E.O. 12958: DECL: 09/04/2018 TAGS: PGOV PREL EPET TX SUBJECT: TURKMENISTAN: EXXONMOBIL STILL TESTING THE WATERS REF: ASHGABAT 0740 Classified By: Charge d'Affaires Sylvia Reed Curran for reasons 1.4(B) and (D). ¶1. (C) During a September 2 meeting, a visiting ExxonMobil representative told the A/DCM that his company is continuing to test the waters with the Government of Turkmenistan. The company is continuing to meet with hydrocarbon officials -- most recently with TurkmenGaz on September 1 and 2 -- in order to try to get a clearer sense of what type of onshore production deal the Government of Turkmenistan would be willing to entertain. So far, the discussions have been very general. While ExxonMobil has not submitted even a conceptual proposal, the representative claimed that "they should know our interest by now, and they have never said that we shouldn't be asking questions." (NOTE: As reported reftel, ExxonMobil told us in June that it wants to work on onshore gas production, and that it wants to package its services as an extraction-to-power producer. END NOTE.) The company sees significant gas opportunities onshore. It had hoped to receive approval for one of its vice presidents to meet with President Berdimuhamedov and to use that meeting to unveil its conceptual plan. Given its lack of success to date in getting a meeting confirmation, it is beginning to reevaluate its options and may instead work the proposal up Turkmenistan's bureaucratic structure. ¶2. (C) COMMENT: During the 1990's, Exxon and Mobil had contracts to work the right bank of the Amu Darya River, where China National Petroleum Corporation currently has a PSA, and the old Monument facility south of what is now Balkanabat, which is now being worked by Burren/ENI. When the two merged, they pulled out of Turkmenistan, leaving ill will in their wake. While we recognize that ExxonMobil wants to tread carefully given this history, our understanding is that it is seriously behind the curve, even on onshore bids. Numerous other companies, including Chevron, BP, Total, Shell and Wintershall reportedly have been doing their groundwork for months, waiting for the government to conclude that it is prepared to allow foreign companies to work onshore. In Chevron's case, it submitted a detailed bid back in March, and has been working to ensure that hydrocarbon officials understand the basic elements of its bid. All this does not ensure that Chevron or any of the others will, in fact, realize success, but it does put ExxonMobil at the end of the pack when it finally does come up with something for Turkmenistan's officials to consider. END COMMENT. CURRAN