Identifier
Created
Classification
Origin
08ASHGABAT829
2008-07-07 09:35:00
CONFIDENTIAL
Embassy Ashgabat
Cable title:
TURKMENISTAN: GOVERNMENT CONSIDERING CHANGES TO
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C O N F I D E N T I A L ASHGABAT 000829
SIPDIS
STATE FOR SCA/CEN, EEB
PLEASE PASS TO USTDA DAN STEIN
USEU BRUSSELS FOR SPECIAL ENVOY GRAY
ENERGY FOR EKIMOFF/THOMPSON
COMMERCE FOR HUEPER
E.O. 12958: DECL: 07/07/2018
TAGS: PREL PGOV EPET TX
SUBJECT: TURKMENISTAN: GOVERNMENT CONSIDERING CHANGES TO
ONSHORE PRODUCTION POLICY?
Classified By: CDA RICHARD E. HOAGLAND: 1.4(B),(D)
C O N F I D E N T I A L ASHGABAT 000829
SIPDIS
STATE FOR SCA/CEN, EEB
PLEASE PASS TO USTDA DAN STEIN
USEU BRUSSELS FOR SPECIAL ENVOY GRAY
ENERGY FOR EKIMOFF/THOMPSON
COMMERCE FOR HUEPER
E.O. 12958: DECL: 07/07/2018
TAGS: PREL PGOV EPET TX
SUBJECT: TURKMENISTAN: GOVERNMENT CONSIDERING CHANGES TO
ONSHORE PRODUCTION POLICY?
Classified By: CDA RICHARD E. HOAGLAND: 1.4(B),(D)
1. (C) British Petroleum (BP) is continuing its efforts to
register a new office in Ashgabat -- although very slowly,
the company's Country Manager for Turkmenistan told EmbOff
during a July 3 meeting. For the time being, the country
manager is continuing to commute between his home in Baku and
Ashgabat, spending a few weeks at a time in Ashgabat.
2. (C) While BP came to Turkmenistan looking for an
agreement to carry out offshore hydrocarbon production, the
country manager told EmbOff that authorities in recent weeks
have begun urging the company to set its sights broader and
to submit a proposal to drill for hydrocarbons throughout
Turkmenistan, including onshore. BP is now reviewing its bid
to decide how an onshore program would fit into the company's
overall strategy for Turkmenistan.
3. (C) COMMENT: Turkmenistan hoped to restrict foreign
participation in hydrocarbon production to its offshore
blocks in the Caspian Sea, leaving its vast gas reserves
onshore to be worked by its own state entities with the help
of foreign-company service contracts. However, it is
becoming increasingly clear that Turkmenistan's state
entities will be unable to increase production of gas to the
levels that Turkmenistan needs to fulfill its guarantee to
China to export 30 bcm per year beginning in 2009, or even to
meet Gazprom's increasing demands. (NOTE: Turkmenistan in
2007 produced about 72 billion cubic meters (bcm) of natural
gas, which was barely enough to cover existing contracts and
domestic consumption. The president called for production to
be increased to 81.5 bcm in 2008, but Turkmenistan's gas
production this year reportedly is lagging behind plan,
suggesting that the country will not be able to produce even
that volume, far less the 100 bcm-plus volumes that
Turkmenistan must reach by 2009 if it is to fulfill its
contract to China without incurring substantial penalties.
END NOTE.) Although Turkmenistan's senior officials continue
to maintain their "we-can-do-it-ourselves" line in official
meetings, others at the mid-level have indicated growing
recognition Turkmenistan may need the technology, expertise,
and capital that major Western oil firms can bring to onshore
investment. That government officials are now urging BP to
consider bidding on onshore projects -- surprising but
welcome news -- is an indication that upper-level officials,
possibly including the president, have acknowledged reality
and are seeking to expand their menu of potential onshore
partners, hoping to benefit from the competition among
foreign firms. END COMMENT.
HOAGLAND
SIPDIS
STATE FOR SCA/CEN, EEB
PLEASE PASS TO USTDA DAN STEIN
USEU BRUSSELS FOR SPECIAL ENVOY GRAY
ENERGY FOR EKIMOFF/THOMPSON
COMMERCE FOR HUEPER
E.O. 12958: DECL: 07/07/2018
TAGS: PREL PGOV EPET TX
SUBJECT: TURKMENISTAN: GOVERNMENT CONSIDERING CHANGES TO
ONSHORE PRODUCTION POLICY?
Classified By: CDA RICHARD E. HOAGLAND: 1.4(B),(D)
1. (C) British Petroleum (BP) is continuing its efforts to
register a new office in Ashgabat -- although very slowly,
the company's Country Manager for Turkmenistan told EmbOff
during a July 3 meeting. For the time being, the country
manager is continuing to commute between his home in Baku and
Ashgabat, spending a few weeks at a time in Ashgabat.
2. (C) While BP came to Turkmenistan looking for an
agreement to carry out offshore hydrocarbon production, the
country manager told EmbOff that authorities in recent weeks
have begun urging the company to set its sights broader and
to submit a proposal to drill for hydrocarbons throughout
Turkmenistan, including onshore. BP is now reviewing its bid
to decide how an onshore program would fit into the company's
overall strategy for Turkmenistan.
3. (C) COMMENT: Turkmenistan hoped to restrict foreign
participation in hydrocarbon production to its offshore
blocks in the Caspian Sea, leaving its vast gas reserves
onshore to be worked by its own state entities with the help
of foreign-company service contracts. However, it is
becoming increasingly clear that Turkmenistan's state
entities will be unable to increase production of gas to the
levels that Turkmenistan needs to fulfill its guarantee to
China to export 30 bcm per year beginning in 2009, or even to
meet Gazprom's increasing demands. (NOTE: Turkmenistan in
2007 produced about 72 billion cubic meters (bcm) of natural
gas, which was barely enough to cover existing contracts and
domestic consumption. The president called for production to
be increased to 81.5 bcm in 2008, but Turkmenistan's gas
production this year reportedly is lagging behind plan,
suggesting that the country will not be able to produce even
that volume, far less the 100 bcm-plus volumes that
Turkmenistan must reach by 2009 if it is to fulfill its
contract to China without incurring substantial penalties.
END NOTE.) Although Turkmenistan's senior officials continue
to maintain their "we-can-do-it-ourselves" line in official
meetings, others at the mid-level have indicated growing
recognition Turkmenistan may need the technology, expertise,
and capital that major Western oil firms can bring to onshore
investment. That government officials are now urging BP to
consider bidding on onshore projects -- surprising but
welcome news -- is an indication that upper-level officials,
possibly including the president, have acknowledged reality
and are seeking to expand their menu of potential onshore
partners, hoping to benefit from the competition among
foreign firms. END COMMENT.
HOAGLAND