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

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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