TURKMENISTAN: STATE AGENCY'S MURADOV

C O N F I D E N T I A L SECTION 01 OF 03 ASHGABAT 000850

SIPDIS

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E.O. 12958: DECL: 07/08/2018
TAGS: PGOV PREL EPET RS KZ AJ TX
SUBJECT: TURKMENISTAN: STATE AGENCY'S MURADOV
TIGHT-LIPPED BUT DROPS HINTS

REF: A. ASHGABAT 0829

B. ASHGABAT 0817

Classified By: CDA RICHARD E. HOAGLAND: 1.4 (B),(D)


1. (C) SUMMARY: Charge paid a farewell call on Executive
Director of the Hydrocarbon State Agnecy Bayrammurad Muradov
on July 7. Muradov (almost) confirmed that Turkmenistan is
seriously reconsidering its past hard-line policy of no
Western energy majors working onshore other than in
service-contract capacity. He hewed closely to his
government's hard-line position on Azerbaijan, but came close
to admitting the two presidents have secret special envoys
trying to work the mid-Caspian disputed-fields problem, which
he insisted will prevent any kind of commercial cooperation
at all until it is resolved. He responded well to advocacy
for U.S. companies, and said Turkmenistan desires increased
contact with Chevron and Marathon, although forward movement
might need to wait for onshore policy resolution. He alleged
that all is fine and dandy with the Caspian Littoral
(Prikaspiskyy) Pipeline to Russia, with construction slated
to start by the end of this year, despite Russian press
reports to the contrary. He praised Kazakhstan as a close
friend and reliable partner. We need frequent high-level
Washington visitors to hand-hold and to encourage forward
movement. Not every visit will have a break-through. But
each visit is vitally important. END SUMMARY.

SHIFT IN ONSHORE POLICY?


2. (C) Charge told Muradov he'd heard rumors Turkmenistan
might be reconsidering its to-date firm policy of no Western
energy firms working onshore except in a service-contract
capacity (reftel A). Muradov confirmed Turkmenistan is
"reviewing" its policy but refused to be drawn out. He did
say, "Tell your companies to be patient."

AZERBAIJAN -- SUPPOSEDLY ALL OR NOTHING


3. (C) In discussing developments with Azerbaijan on Caspian
Sea energy affairs, Muradov hewed closely to Turkmenistan's
hard-line talking points. Charge said he thoroughly
understood the disputed fields of Serdar/Kyapaz and
Osman-Omar/ACG are a politial issue that needs highest-level
resolution. But, in the meantime, if Turkmenistan wants to
move forward with Azerbaijan on commercial cooperation in the
Caspian, perhaps within the framework of the
Turkmenistan-Azerbaijan Bilateral Economic Commission, one
way might be for an inter-connector production pipeline from
Turkmenistan's Livonvov field (operated by Petronas) to
Azerbaijan's Oily Rocks, as SOCAR's Chairman Abdullayev had
suggested to U.S. visitors in Baku in May. Both fields are
undisputed. The Charge encouraged Turkmenistan to
compartmentalize the political from the commercial for larger
strategic reasons.


4. (C) Muradov bristled and took Turkmenistan's hardest
line: no possibility of any cooperation until disputed
fields are resolved. He asked how Turkmenistan can follow a
two-track policy when Azerbaijan is "stealing millions of
dollars a day from the children of Turkmenistan in
Osman-Omar?" He further posited, only half tongue-in-cheek,
"Maybe Livonov is ours today, but what if Azerbaijan claims
it tomorrow? Then we'll claim Oily Rocks!" He asserted, "At
this point, it all depends on delimitation," echoing what

ASHGABAT 00000850 002 OF 003


President Berdimuhamedov told the Charge on June 30 (reftel
B).


5. (C) Charge asked if quiet diplomacy between Turkmenistan
and Azerbaijan is working on this issue. Muradov demurred
and pointed to the Turkmenistan-Azerbaijan
foreign-ministry-level joint commission on delimitation.
Charge dismissed that as bureaucracy-as-usual and asked if
the two presidents have secret special envoys working on the
question. Muradov looked a little taken aback and said, "I
can't tell you about that." Charge assured Muradov such
information was none of his business, and the the United
States does not seek to insert itself in sensitive secret
diplomacy, but does stand ready to assist, if asked, because
for strategic purposes the United States very much wants to
see this issue resolved sooner rather than later.


6. (C) Muradov, a little nonplussed, added, "When President
Berdimuhamedov was in Baku, he gave President Aliyev a
completely reasonable proposal, but we're still waiting for
their response." Charge asked, "Can you tell me the
details?" Muradov replied, "No!" Then he added even he
himsmelf doesn't have all the details and knows only the
general outline. (COMMENT: In the worst-case scenario,
Berdimuhamedov's proposal might have been something like,
"Give us all fo Serdar/Kyapaz, and we won't take you to
international arbitration over Osman-Omar/ACG." END
COMMENT.) As further possible evidence of the Turkmenistani
maximalist position, Muradov said, "We don't expect any kind
of Azeri response until after their presidential election
this Fall. It would be too hard for them now." When Charge
commented, "That's a long time away," Muradov smiled, "Time
is on our side."

U.S. CORPORATIONS


7. (SBU) CHEVRON: Charge told Muradov the United States
encourages Turkmenistan to look closely and positively at the
current Chevron proposal and to take the necessary next steps
for meetings to work on details. Muradov responded, "Chevron
is a good, respected, promising company. We still have a few
questions how to retain our rights, but we want to work
seriously with them on their proposal." Charge urged Muradov
to schedule in the near future a meeting to look at next
steps.


8. (C) MARATHON: Charge recommended Turkmenistan also look
closely at the Marathon proposal, since it fits closely with
Turkmenistan's stated desire to develop its petrochemical
industry. Muradov responded that Turkmenistan is "waiting
impatiently" for Marathon's more detailed proposal, now that
Turkmenistan has signed Marathon's confidentiality agreement.
He characterized Chevron as more forthcoming than Marathon.
He claimed Marathon is demanding current onshore access to
evaluate Turkmenistan's fields, but Turkmenistan needs to
know more about Marathon's real goals before it grants that
access. He said, "We are waiting for their detailed
proposals before we can move forward. They interest us
greatly, I assure you, but we need to hear more from them."


9. (SBU) EXXON-MOBIL: Charge encouraged Turkmenistan to
respond positively to Exxon-Mobil's letter requesting
high-level meetings for its senior executives. Muradov said
he is aware of the request.


ASHGABAT 00000850 003 OF 003


CASPIAN LITTORAL PIPELINE


10. (C) On the status of the Gazprom-promoted Caspian
Littoral (Prikaspiskyy) Pipeline, Muradov gave the standard
line that all is well and construction should start before
the end of this calendar year. Charge noted this is not what
he has seen in the Russian press that quoted Russian energy
officials as saying Prikaspiskyy can't move forward without
identifying new Turkmen natural-gas sources. Muradov simply
said, "Russia is our business partner."

KAZAKHSTAN A GOOD PARTNER


11. (C) Muradov volunteered that Kazakhstan is an "excellent
and reliable partner" on energy issues. Charge agreed and
added, "I hope you will soon add another member -- across the
Caspian -- to that club. It is important for you." Muradov
grinned and said, "Let's see."


12. (C) COMMENT: Despite our desire to charge ahead,
Turkmenistan is playing its own self-interested waiting game
in Caspian energy affairs. But it is not necessarily a
negative role, if we have the patience to wait them out. At
this point, offering to stand by as a loyal friend might help
give them the confidence to move forward. Our interventions
during the past year have led to real internal debate about
their onshore policy, which we predict will have a positive
resolution. What we need is frequent high-level visitors
from Washington to hand-hold and to encourage forward
movement. Not every visit will have a break-through. But
each visit is vitally important. END COMMENT.
HOAGLAND