TURKMENISTAN: AUSTRIAN ENERGY COMPANY OMV SMELLS

C O N F I D E N T I A L SECTION 01 OF 02 ASHGABAT 001237 SIPDIS STATE FOR SCA/CEN; EEB PLEASE PASS TO USTDA DAN STEIN USEU BRUSSELS FOR SPECIAL ENVOY GRAY ENERGY FOR EKIMOFF/THOMPSON COMMERCE FOR HUEPER E.O. 12958: DECL: 09/15/2018 TAGS: PGOV PREL EPET TX AU SUBJECT: TURKMENISTAN: AUSTRIAN ENERGY COMPANY OMV SMELLS FEAR AMONG TURKMEN OFFICIALS AFTER GEORGIA REF: A. ASHGABAT 0771 ¶B. ASHGABAT 1205 Classified By: Charge Sylvia Reed Curran for reasons 1.4 (b) and (d). ¶1. (C) SUMMARY: The Austrian energy company OMV has been having trouble communicating its development ideas to government officials in Ashgabat, and its regional representative believes that the Russian military actions in Georgia may be causing some hand wringing at the highest levels. A key element of OMV's proposed work here relates to building a gas pipeline connecting Turkmen gas fields to Azerbaijan's infrastructure. OMV believes the project might constitute a calculated risk on the part of Turkmen officials who possibly fear a negative Russian reaction could come in response. This heightened sensitivity may be one reason for the government's silence on a number of energy development decisions, as it ponders its foreign and economic policy options. END SUMMARY. ¶2. (C) Austrian energy company OMV's Caspian region country manager Wolfgang Sporrer met with poloff September 15. He described the Turkmen government representatives at the conference as uncommunicative and cold. He said that none of the Turkmen officials had met with a single private company representative during the course of the conference. Officials had met with high-level representatives of national companies SOCAR and Gazprom, but had rebuffed requests to meet with anyone else. ¶3. (C) Sporrer said he and others in the corporate oil and gas community have become aware of a new level of sensitivity on the part of Turkmen energy officials about making energy development decisions that will upset the Russians. He noted that local Turkmen with whom he spoke recently had become very concerned that Russia's deployment of troops into Georgia last month proved that Russia is still ready to act to protect its interests in the near abroad, and he is convinced that the events have perceptibly altered government officials' views on energy development and the potential export of resources westward. ¶4. (C) Although OMV has not yet submitted any formal proposals to the State Agency for the Management and Use of Hydrocarbon Resources, they are interested in constructing an "inter-connector" pipeline between Turkmenistan and Azerbaijan. The company is most interested, at this point, in buying Turkmen gas from the Livanov field in Block I, currently being worked by Petronas, connecting the field's production to existent infrastructure at nearby Azerbaijan-controlled gas fields such as Chirag, thus putting Turkmen gas into westward gas transport infrastructure. It is also interested in onshore work in the Amu Darya basin. (COMMENT: Turkmen officials have indicated to U.S. officials and separately to Chevron that the country prefers that Turkmen companies work onshore. septels. END COMMENT.) ¶5. (C) Since OMV has not had good success getting meetings with Turkmen energy officials here, the company has petitioned the Austrian President Heinz Fischer to raise the company's development ideas with President Berdimuhamedov when he makes an official visit to Vienna, possibly in early November. ¶6. (C) Sporrer indicated that OMV still has plans to open an office in Ashgabat, but the process is moving slowly. He refused to name the company's potential local representative, because salary negotiations are still in play, but he ASHGABAT 00001237 002 OF 002 acknowledged that the representative would ultimately be "quite expensive." (NOTE: OMV is probably preparing to hire Murad Nepesov, a young, talented "oil trader" who may have business connections to former President Niyazov's son, Murad. (Ref A). END NOTE.) ¶7. (C) COMMENT: Sporrer is not the first Western energy representative to describe "arms length" treatment by the Turkmen and ascribe it to Turkmen concern about Russian reaction/pressure in the wake of the Georgia conflict. Hungary's Nabucco ambassador Mihaly Bayer told us the same thing (Ref B). Despite any possible chill, companies are continuing to knock on the door, hoping someone will answer soon. END COMMENT. CURRAN