RUSSIAN AMBASSADOR PROVIDES OVERVIEW OF RELATIONS

C O N F I D E N T I A L SECTION 01 OF 02 ASHGABAT 001643 SIPDIS E.O. 12958: DECL: 12/29/2018 TAGS: PREL EPET ECON RU TX SUBJECT: RUSSIAN AMBASSADOR PROVIDES OVERVIEW OF RELATIONS WITH TURKMENISTAN Classified By: Charge Richard Miles. Reasons 1.4 (B) and (D). ¶1. (C) SUMMARY: In a recent meeting with the Charge, the Russian Ambassador discussed Russian activity in Turkmenistan. Russian oil and gas firms are pursuing production projects, with two firms close to finalizing agreements. The Ambassador appeared well informed about the Chinese gas pipeline and production project. The Russian government provides scholarships for Turkmen to study throughout Russia and is opening a fully-licensed branch of the Gubkin Oil and Gas Institute in Ashgabat. The Russian approach to its relations with Turkmenistan seeks to protect its interests and pursue new business opportunities in oil and gas, while at the same time building Turkmen capacity in the sector. It remains to be seen to what extent the Turkmen view these efforts as an attempt to perpetuate their gas export dependence on Russia. END SUMMARY. RUSSIAN FIRMS LOOKING FOR OIL/GAS PROJECTS ¶2. (C) During a December 24 meeting with the Charge, Russian Ambassador Igor Blatov outlined the activities of four Russian companies, Lukoil (partnering with ConocoPhillips), Itera, TNK-BP and Tatneft, that are pursuing projects in Turkmenistan. According to Blatov, Lukoil and Itera are closest to final agreements. The Lukoil/ConocoPhillips proposal would involve a USD three billion investment in exploration and production over a four or five year term. The proposed TNK-BP project would revitalize approximately 2,000 capped oil wells through the use of advanced extraction technology. FOLLOWS PROGRESS OF CHINESE GAS PROJECT ¶3. (C) Blatov expressed no concern about the potential competition for Turkmen gas posed by the completion of the Chinese pipeline next year. He was well informed about the details, explaining that of the 30 bcm per year commitment to China, 17 bcm would be provided by Turkmengaz and the remaining 13 bcm would be produced by the Chinese under their production sharing agreement. He also mentioned ongoing Chinese construction of two gas purification plants necessary to render the high-sulphur gas usable. ¶4. (C) In Blatov's view, the Turkmen do not need foreign help in order to develop the huge gas deposits in eastern Turkmenistan. The deposits have already been located, minimizing the investment needed. Also, in Blatov's opinion, the Turkmen have engineers who are sufficiently skilled to perform the task. RUSSIANS ACTIVE IN EDUCATION SPHERE ¶5. (C) Blatov explained some of the challenges encountered in establishing an Ashgabat branch of the Moscow-based Gubkin Oil and Gas Institute. Since a diploma issued by the Ashgabat branch will not differ in any respect from those issued in Moscow, the branch needs to be licensed by the Russian Ministry of Education. Russian faculty is being sent from the Moscow institution and some Turkmen faculty will be sent to Moscow for training and licensing in fields such as mathematics, computer science and chemistry. ¶6. (C) In addition to setting up the Gubkin branch, the Russian Government provided scholarships for 250 Turkmen students to study at universities throughout Russia in a wide-range of subjects. Turkmenistan government agencies also sent about 100 people to study at government expense in the oil and gas sector at the Gubkin Institute and Tyumen State Oil and Gas University, as well as ship engineering at Astrakhan State Technical University. HIGH LEVEL VISITS KEEP BLATOV IN ASHGABAT ¶7. (C) Blatov bemoaned his inability to travel much in-country, saying that there are too many high-level visits ASHGABAT 00001643 002 OF 002 that keep him in Ashgabat. He mentioned DPM Viktor Zubkov's December 9 visit as well as numerous visits related to setting up the Gubkin branch. Gazprom CEO Alexey Miller's visit the following day would be the last high-level visit of ¶2008. He said President Berdimuhamedov would travel to Moscow in March. ¶8. (C) COMMENT: In the competition to secure access to Turkmen gas, it appears the Russians are not relying solely on the advantage provided to them by the existing transport infrastructure and geography. Rather, they are attempting to build a partnership based not only on language and historical ties, but also on new investment in production capabilities according to Turkmen priorities and in the human capital needed to operate a modern hydrocarbons sector. It remains to be seen to what extent the Turkmen see Russian efforts as an attempt to limit their options and perpetuate their dependence on Russia to export their gas. END COMMENT. MILES