TURKMENISTAN: INPUT FOR NEW REQUIRED REPORTS TO

UNCLAS SECTION 01 OF 02 ASHGABAT 000209 SIPDIS SIPDIS STATE FOR SCA/CEN, EEB PLEASE PASS TO USTDA DAN STEIN ENERGY FOR EKIMOFF/THOMPSON COMMERCE FOR HUEPER E.O. 12958: N/A TAGS: ENRG SENV APER ABUD TX SUBJECT: TURKMENISTAN: INPUT FOR NEW REQUIRED REPORTS TO CONGRESS ON ENERGY REF: STATE 10743 ¶1. (U) The following is Embassy Ashgabat's response to reftel, which requests input for two new reports to Congress on energy. Paragraph 2 offers a brief overview of the energy situation in Turkmenistan, paragraph 3 lists energy-related U.S. objectives, paragraph 4 offers a short description of the Embassy's activities, and paragraph 5 contains the Embassy's responses to questions A, B, C and D in paragraph 4 of reftel. ENERGY SITUATION IN TURKMENISTAN ¶2. (U) Turkmenistan is a hydrocarbon-rich country that shares its southern border with Afghanistan and Iran. Historically, pipelines through Russia have been Turkmenistan's sole means of exporting its hydrocarbons (mostly natural gas, with some oil) to foreign markets, offering the Russian Federation a virtual monopoly over Turkmenistan's exports. The construction of a small (8-13 billion cubic meter/year) natural gas pipeline to Iran in the mid-1990's offered limited access to a new market. Although Turkmenistan for years eschewed participation in regional energy initiatives, it has been supplying Afghanistan with limited amounts (around 165 megawatts) of cheap (2 cents/kilowatt hour) electricity for several years. U.S. GOVERNMENT OBJECTIVES ¶3. (U) The death of Turkmenistan's President Saparmurat Niyazov in December 2006 offered new opportunities in the energy sector. The embassy has supported a U.S. initiative to increase engagement and cooperation with Turkmenistan on energy matters. Objectives of this engagement include: -- Strengthening Turkmenistan's sovereignty by promoting diversification of the country's export pipelines. -- Increasing Turkmenistan's hydrocarbon production. -- Increasing transparency of and investor confidence in Turkmenistan's data on its hydrocarbon reserves. -- Increasing participation and investment by U.S. companies -- particularly the "majors" -- in Turkmenistan's hydrocarbon sector. -- Increasing understanding among Turkmenistan's hydrocarbon officials of world hydrocarbons markets and international standards. -- Increasing Turkmenistan's participation in regional energy development initiatives such as USAID's REMAP program. -- Promoting Afghanistan's stability and economic development through increased exports of Turkmen electricity to Afghanistan. EMBASSY ACTIVITIES ¶4. (U) In addition to providing extensive reporting on Turkmenistan's production capabilities and new developments in Turkmenistan's rapidly changing hydrocarbon and energy sectors, the Embassy in 2007 has: -- Supported eight visits by U.S. hydrocarbon officials, including the U.S. Secretary of Energy, that were directed toward establishing and strengthening a bilateral energy dialogue. The Embassy also supported more than two dozen other visits in which energy cooperation was a major topic for discussion. -- Supported efforts by the U.S. Trade and Development Agency (USTDA) to develop a training program for Turkmenistan's hydrocarbon sector. -- Supported preparations for a USTDA-sponsored high-level ASHGABAT 00000209 002 OF 002 visit in September by Turkmen hydrocarbons officials to the United States that culminated in a conference with U.S. businessmen interested in investing in Turkmenistan's hydrocarbon sector. -- Provided briefings and -- consistent with U.S. regulations -- support to U.S. hydrocarbons firms interested in establishing a commercial presence in Turkmenistan. -- Urged Turkmenistan's energy officials to participate in conferences and training opportunities organized by USAID's REMAP program. -- Supported USAID/Kabul's efforts to increase exports of electricity to Afghanistan. ¶5. (U) A. Within Embassy Ashgabat, the Political-Economic section takes the lead on gas and oil and domestic energy issues. There are three U.S. officers and five locally employed staff in the section. USAID works energy issues related to USAID's REMAP program and efforts to expand energy exports from Turkmenistan to Afghanistan. The Embassy's USAID section has one American representative, three locally hired project specialists, and one American EFM public outreach coordinator. ¶B. Positions of employees that work on energy matters and the percentage of time they devote to energy matters: -- Charge/Ambassador: 20 percent of time -- Deputy Chief of Mission: 5 percent of time -- Political-Economic Counselor (Energy Officer): 60 percent of time -- 1 Political-Economic FSN: 60 percent of time -- USAID Country Representative: 5 percent of time -- 1 USAID FSN: 10 percent of time ¶C. Description of the positions of employees and the kinds of work they do: -- Charge/Ambassador: Engage with host government officials on energy issues, maintain contacts with hydrocarbon companies, coordinate bilateral energy dialogue. -- Deputy Chief of Mission: As needed, maintain contacts with hydrocarbon companies, report on energy-related meetings. -- Political-Economic Counselor: Report on developments in hydrocarbon sector and on hydrocarbon sector production capabilities, meet with host government officials on energy issues, report on energy-related meetings, maintain contacts with hydrocarbon companies, including briefing businessmen interested in entering Turkmenistan's energy sector, support energy-related visits. -- Political-Economic FSN (Economic/Commercial Specialist): Translate for energy dialogue meetings, report on developments in hydrocarbon sector, maintain contacts with hydrocarbon companies and government energy-sector officials, support energy-related visits. -- USAID Country Representative and USAID Economic Growth Project Management Specialist: Meet with energy sector officials to promote Turkmenistan's participation in REMAP and increased exports of electricity to Afghanistan, coordinate USAID/Kabul and U.S. government activities related to increasing electricity exports to Afghanistan with Embassy of Afghanistan; report on developments. ¶D. Budget: -- Personnel Costs: $158,000 -- Programs (energy-related travel to the provinces and energy officers' conference): $6500 HOAGLAND