TURKMENISTAN: PRESIDENT VISITS SOUTH YOLOTEN AND OSMAN

UNCLAS SECTION 01 OF 02 ASHGABAT 000327 SIPDIS SENSITIVE SIPDIS STATE FOR SCA/CEN, EUR/RUS, EUR/CARC, EEB PLEASE PASS TO USTDA DAN STEIN COMMERCE FOR HUEPER ENERGY FOR EKIMOFF/THOMPSON E.O. 12958: N/A TAGS: PREL EPET PGOV TX SUBJECT: TURKMENISTAN: PRESIDENT VISITS SOUTH YOLOTEN AND OSMAN FIELDS ¶1. (U) Sensitive but unclassified. Not for public Internet. ¶2. (SBU) SUMMARY: On March 4 President Berdimuhamedov visited the South Yoloten and Osman onshore oil and gas fields. According to Turkmenistan media reports, the field has a potential of 3 trillion cubic meters of gas. The timing of the trip to South Yoloten and Osman fields did not have an apparent explanation, since there has not been any significant change in the operations or reserve estimates. The trip may have been organized on short notice to convince Berdimuhamedov that national companies can indeed successfully operate at depths of 4,500 meters. There is also the possibility he felt the need to advertise internationally that Turkmenistan has plenty of gas to meet its commitments, and more. END SUMMARY. HOW MUCH GAS IS OUT THERE? ¶3. (U) During his day-long trip March 4 to the South Yoloten and Osman onshore oil and gas fields located 50 kilometers south of Mary city, President Berdimuhamedov visited one oil well and three gas exploration wells. The first discoveries date back to 2006, but President Berdimuhamedov inaugurated the fields by torching gas flares and turning oil control valves at several of the wells. According to Turkmenistan media reports, the field has a potential of 3 trillion cubic meters of gas, reportedly making it one of the largest gas fields in the world. The gas wells are reported to be as deep as 4,500 meters. Initial tests ran on these wells yielded daily flow rates of 0.7 million cubic meters, 1 million cubic meters and 7 million cubic meters of natural gas. Official reports also mention six more gas wells and three oil wells, also with good production rates. No test result figures were provided regarding these wells. The same reports indicate that the formation has a thickness of more than 600 meters, but fail to mention any information on thickness of actual reservoirs. ¶3. (U) Turkmenistani experts claim that South Yoloten and Osman, which were considered separate structures in the Soviet era, are one giant field. In November 2006, several days after a massive blow-out of one of Osman's exploration wells, former President Niyazov announced that the Southern Yoloten-Osman had 7 trillion cubic meters of gas. However, the current figure that Turkmenistan quotes is only 3 trillion cubic meters. On December 26, 2007, President Berdimuhamedov instructed hydrocarbon officials to perform an international audit of the hydrocarbon reserves of South Yoloten and Osman fields, but the work has not yet commenced. ¶5. (U) Exploration of the South Yoloten field was first launched in 2005, and a year later the field started to produce its first oil. However, the oil production remains insignificant. It is supplied to the Seydi refinery by rail. Exploration and production wells in the South Yoloten and Osman fields are drilled with the help of Parker Drilling/Chalik Enerji and the Chinese National Petroleum Company's (CNPC) Changqing Petroleum Exploration Bureau. CNPC signed a service contract with Turkmengeology in April 2007 to drill 12 natural gas wells within three years. Post understands that both Parker Drilling and CNPC experienced blow outs while drilling. ¶6. (SBU) COMMENT. The timing of the trip to South Yoloten and Osman fields did not have an apparent explanation, since there has not been any significant change in the operations or reserve estimates. On the contrary, the announced potential gas volume is lower than had been first declared by President Niyazov in 2006. The visit occurred several days after Ambassador Mann's visit to Turkmenistan and discussions of Turkmenistan's technological capability to produce in the sub-salt Jurassic layers. The trip may have been organized on short notice to convince Berdimuhamedov that national companies can indeed successfully operate at such depths. There is also the possibility he felt the need to advertise ASHGABAT 00000327 002 OF 002 internationally that Turkmenistan has plenty of gas to meet its commitments, and more. END COMMENT. HOAGLAND