TURKMENISTAN: EXXONMOBIL STILL CASTING ABOUT FOR

C O N F I D E N T I A L ASHGABAT 001431

SIPDIS

STATE FOR SCA/CEN, EEB

E.O. 12958: DECL: 11/02/2018
TAGS: EPET PREL PGOV ENRG EINV TX
SUBJECT: TURKMENISTAN: EXXONMOBIL STILL CASTING ABOUT FOR
AN ONSHORE GAS PROJECT

REF: A. ASHGABAT 404

B. ASHGABAT 740

C. ASHGABAT 1169

Classified By: Charge d'Affaires a.i. Sylvia Reed Curran
for reasons 1.4 (B) and (D).


1. (C) On November 3, ExxonMobil Caspian Area Manager Rob
Young and Regional Upstream Coordinator David Rekhviashvili
met with the Charge to discuss ExxonMobil's interest in doing
an onshore project in Turkmenistan. Young said they were
here to make a proposal to the Turkmenistan government to
develop the South Yolaten-Osman gas field. He noted that
following the excitement generated by the results of the
Gaffney Cline audit and Turkmenistan's appeal at the Baku
conference for help in treating high-sulfur gas, the timing
was right for ExxonMobil to offer its expertise in this area.



2. (C) In making ExxonMobil's case, Young pointed out that a
gas producer should not rely on the single option of
marketing the sulfur by-product as a commercial product.
Production of the primary product, gas, should not be
constrained by possible disposal issues if the sulfur can not
be marketed. ExxonMobil could offer technology to reinject
sulfur into the subsurface, which would provide a second,
safe disposal option for excess sulfur. According to Young,
depending on the level of Turkmen gas production, up to eight
million tons of sulfur could be produced each year.
Production of 100 bcma of gas would generate five bcma of
sulfur in need of appropriate handling.


3. (C) During their visit, the ExxonMobil officials were
hoping to met with TurkmenGas Chief Baymyrat Hojamuhammedov,
State Hydrocarbons Agency Chief Yagshygeldi Kakayev and Oil
and Gas Minister Annaguly Deryaev. However, none of the
meetings were yet confirmed. Young mentioned that ExxonMobil
was still trying to arrange a meeting for company officials
with President Berdimuhamedov, but the company has had
difficulty in figuring out how to gain access. He recognized
the importance of developing a relationship with government
officials, saying that Turkmenistan government decisions to
award contracts are not made on a project's technical merits
alone.


4. (C) Before ExxonMobil would open an office in Ashgabat,
Young indicated the company would need to see that the door
to onshore projects will open to foreign companies. On the
other hand, he noted that ExxonMobil was used to playing a
long-term game. He said that, during his meetings with
Turkmenistan officials, he would invite them to Houston.
Training for Turkmen nationals would also be part of any
proposal, citing ExxonMobil's worldwide practice of
developing the future managers as part of the company's
general modus operandi.


5. (C) COMMENT: ExxonMobil has expressed its interest in
doing an onshore project to the Turkmen, but it seems to lack
a game plan to advance its case. While ExxonMobil officials
acknowledged that the best technology alone won't necessarily
prevail, they seemed at a loss as to how to best make their
case to Turkmen officials and present the company as a
desirable partner. In the meantime, other international
companies have been more proactive in opening offices,
sending letters of congratulations on auspicious holidays,
hosting overseas study trips and offering diverse training
opportunities in order to demonstrate their commitment and
the potential benefits for the Turkmen side. One problem may
be that the local representative here acts as an
administrative assistant, and does not meet regularly with
oil and gas officials, developing contacts. In that sense,
ExxonMobil's efforts appear somewhat half-hearted compared to
its rivals, which might be a factor in the event onshore
projects are ever permitted. END COMMENT.
CURRAN