TURKMENISTAN: MIDLAND OIL AND GAS PURSUING SERVICE

C O N F I D E N T I A L ASHGABAT 001344

SIPDIS

STATE FOR SCA/CEN, EEB

E.O. 12958: DECL: 10/09/2018
TAGS: PREL ECON EINV EPET TX
SUBJECT: TURKMENISTAN: MIDLAND OIL AND GAS PURSUING SERVICE
CONTRACTS AND OFFSHORE BLOCKS

REF: ASHGABAT 1341

Classified By: Charge d'Affaires a.i. Sylvia Reed Curran for reasons 1.
4 (B) and (D).


1. (C) SUMMARY: The local agent for Midland Oil and Gas
("Midland"),a UK entity based in New York, said Midland is
close to concluding an agreement to provide drilling rigs
worth USD 400 million to Turkmen Oil. The company is also
looking for an operating partner to develop three offshore
blocks. While an attractive package of high technology
equipment and training might be enough to close the drilling
rig deal, prospects for the offshore project appear to be
long-term at best. END SUMMARY.


2. (C) On October 8, poloff met with Midland's local agent,
Archinhan Bayramgeldyev, to discuss Midland's activities in
Turkmenistan. According to its website, Midland is an
"energy venture born of a Swiss financial company," founded
in the UK, focused on Turkmenistan, with its sole office in
New York. The company have been active in Turkmenistan for
two years and registered with the Turkmenistan government in
June 2008. Bayramgeldyev, a lawyer, makes arrangements for
Midland officials when they visit Turkmenistan. He said New
York-based Midland Chairman and President Robert Murphy has
met with President Gurbanguly Berdimuhamedov on three
occasions, including once in New York during UNGA in 2007.
Initially, Midlands' efforts in Turkmenistan involved
representing a consortium of South Korean companies,
including LG and Hyundai. Bayramgeldyev said that after an
introductory meeting took place with President
Berdimuhamedov, the South Korean companies began to deal
directly with the Turkmen. Currently, Midland works only on
its own behalf and, at a subsequent meeting with President
Berdimuhamedov, Murphy was given verbal assurances of
favorable consideration by the President.


3. (C) Midland is pursuing two projects in Turkmenistan. One
involves a servicing agreement with Turkmen Oil to provide 20
drilling rigs, custom designed and built for local
conditions, with a value of USD 400 million. Midland would
arrange for U.S. suppliers to be subcontractors to provide
the equipment and expertise. Bayramgeldyev said Midland
submitted the proposal in April 2008. He highlighted that it
includes a provision for training of local staff in the new
technologies that will be delivered. The proposal has been
approved by both Turkmen Oil's technical specialists and by
the head of Turkmen Oil Garyagdy Tashliyev, and awaits
Cabinet of Ministers Deputy Chairman Tachberdi Tagiyev's
signature. Bayramgeldyev said he expected the signing of the
agreement to take place during the next couple of weeks.


4. (C) A second project, undertaken "at the suggestion of
President Berdimuhamedov," involves the development of three
offshore blocks. Bayramgeldyev said the identity of the
blocks was a commercial secret, but mentioned that it would
be a 25-year project involving a five billion dollar
investment. Midland would bring financing to the project,
but it still needs to find an operating partner.


5. (C) COMMENT: Given the current turbulence in world
financial markets, Midland's position as a financial
intermediary and deal maker may be limited in the short-term.
The company itself is feeling a financial squeeze and is
keeping expenses to a minimum (reftel). On the other hand,
it may have found a window of opportunity as a supplier in
dealing with Turkmen Oil by promising new technology and
training for locals, two GOTX priorities. END COMMENT.
CURRAN