C O N F I D E N T I A L ASHGABAT 000996

SIPDIS

STATE FOR SCA/CEN, EEB
PLEASE PASS TO USTDA DAN STEIN
ENERGY FOR EKIMOFF/THOMPSON
COMMERCE FOR HUEPER

E.O. 12958: DECL: 07/31/2018
TAGS: PREL PGOV EPET TX
SUBJECT: TURKMENISTAN: STATE AGENCY HEAD TELLS CHEVRON IT
WILL BE READY TO BEGIN TALKS SOON

REF: A. ASHGABAT 686

B. ASHGABAT 684

C. ASHGABAT 626

D. ASHGABAT 588

E. ASHGABAT 457

Classified By: Charge d'Affaires Sylvia Reed Curran for reason 1.4(B) a
nd (D).


1. (C) During a brief July 31 meeting, Chevron's AMCIT
country manager told emboff that he had a very positive July
30 meeting with the Executive Director of Turkmenistan's
State Agency for Management and Use of Hydrocarbon Resources,
Bayrammurat Muradov. This was the second meeting between the
two men in two weeks. Although Muradov had expressed doubts
that a proposed visit by Chevron Vice President Jay Pryor
would work for September 8, he promised to look for
alternative dates in the first half of September, when
President Berdimuhamedov would be available to meet with
Pryor. Muradov also suggested that the State Agency will be
ready to start discussing Chevron's proposal in seven to ten
days. Although Muradov doubted that the State Agency would
agree to a production sharing agreement (PSA), he believed
that Turkmenistan would be willing to consider either a risk
service agreement or joint venture. The Chevron country
manager told emboff that his company would be willing to
consider almost any type of agreement, which is long-term,
would allow Chevron to book reserves, and would offer up a
fair economic return, including either of the types that
Muradov said might be possible. Grinning, the country
manager parroted to emboff words that she had often told him
-- that "it pays to be patient!"


2. (C) The Chevron representative also reported that the new
U.S.-Turkmenistan Business Council had just held its first
meeting in Washington. Chevron's Washington representative
is the fledgling body's chairman. The council is working on
a letter to Turkmenistan's Ambassador to the United Nations
inviting President Berdimuhamedov to speak at a council lunch
in New York when he attends the UN General Assembly session
in September.


3. (C) COMMENT: Chevron has reason to be pleased: as
reported reftels, it has been disappointed by the
government's refusal up to now to begin negotiations on
Chevron's proposal to work onshore, sub-salt gas fields. The
fact that Muradov expects to be able to begin discussions in
a week or so is the strongest indication yet that
Berdimuhamedov may finally have taken in the crisis that
Turkmenistan will shortly face in meeting its already
contracted export commitments (septel) and has decided to
reverse the country's ban on onshore production by foreign
companies. But even if Turkmenistan is able to reach onshore
production agreements relatively quickly with Chevron and
other major oil companies (and this may be unlikely, given
how long its negotiations with ConocoPhillips/Lukoil have
dragged on), it will still face a five- to ten-year gap
before those companies will be prepared to bring production
into full gear. END COMMENT.
CURRAN