TNK-BP WAITING AND HOPING IN TURKMENISTAN

C O N F I D E N T I A L SECTION 01 OF 02 ASHGABAT 001025

SIPDIS

STATE FOR SCA/CEN; EEB
ENERGY FOR EKIMOFF/THOMPSON
COMMERCE FOR HUEPER

E.O. 12958: DECL: 08/13/2019
TAGS: EPET PGOV EINV PBTS AZ TX
SUBJECT: TNK-BP WAITING AND HOPING IN TURKMENISTAN

REF: ASHGABAT 995

Classified By: Charge Richard Miles, reasons 1.4 (b) and (d).


1. (C) SUMMARY. Russian-British co-owned TNK-BP remains one
of a handful of foreign oil and gas companies attempting to
break into the well-guarded Turkmen hydrocarbon sector with
little success to date. TNK-BP's Program Director for
Turkmenistan Oleg Lonovenko attributed TNK-BP's current lack
of success mainly to frequent turnover of ranking officials
in the Turkmen Government, and the unwillingness of President
Berdimuhamedov to meet with representatives of foreign
companies. Lonovenko stressed that despite little
Turkmenistan Government movement toward a deal, TNK-BP would
keep its Ashgabat office open indefinitely, noting that
future business opportunities far outweighed the costs of
maintaining an office. Lonovenko did not feel that strained
Turkmen-Russian relations over gas, nor the disputed
territory in the Caspian between Turkmenistan and Azerbaijan,
had negatively impacted TNK-BP's chances. Instead, he
believed that Turkmenistan's standing policy toward all
foreign companies was TNK-BP's biggest hurdle. END SUMMARY.


2. (C) On August 12, Economic Officer met with TNK-BP country
representative for Turkmenistan Oleg Lonovenko to discuss
TNK-BP's chances of eventually striking an offshore deal with
the Turkmen. TNK-BP is fifty percent owned by the Russian
company TNK, while British Petroleum (BP) owns the other
half. When asked how both TNK-BP and BP could both be
competing for contracts in Turkmenistan, Lonovenko explained
that TNK-BP would of course use BP technology and equipment
in the event that TNK-BP landed a deal, so BP is in a win/win
situation by having TNK-BP in the country. Lonovenko was
eager to show off TNK-BP's large, fully staffed, modern
office, stating that TNK-BP was committed to staying in
Ashgabat for the long haul. However, Lonovenko was also
downbeat on TNK-BP's current prospects, stating that all of
the foreign oil companies in Ashgabat he knew of had little
to brag about.


3. (C) Lonovenko attributed TNK-BP's inability to get a
contract primarily to the frequent turnover of key officials
at the State Agency for Management and Use of Hydrocarbon
Resources. He stated that since 2007, TNK-BP had been close
to getting a business proposal for offshore exploration
approved through the agency twice, and both times key
officials were fired at the last minute, forcing TNK-BP to
start all over with new officials. He added that the new
appointees were leery of meeting with foreign companies, and
it took TNK-BP almost six months to get a meeting with the
new Agency officials.


4. (C) Lonovenko was also disappointed that TNK-BP has not
been able to get the necessary support from President
Berdimuhamedov. He added that it had been nearly two years
since his company met with the President. When asked why
TNK-BP was unable to meet with the president, Lonovenko
opined that Berdimuhamedov purposely avoids meetings with
foreign oil and gas companies mainly because the president
believes he must provide a deliverable.


5. (C) When asked about the impact on TNK-BP of strained
relations between Russia and Turkmenistan over gas, Lonovenko
stated there was no impact. He asserted that all foreign
companies receive basically the same attention in
Turkmenistan -- little attention. He described TNK-BP's
chances of getting a deal in Turkmenistan, despite its
Russian affiliation, as equal to those of other companies,
adding that overall, TNK-BP enjoyed a good relationship with
the GOTX, and the GOTX did not associate TNK-BP with Gazprom.


6. (C) Lonovenko also did not believe that the disputed
hydrocarbon fields in the Caspian between Turkmenistan and
Azerbaijan would impact TNK-BP regardless of the outcome

ASHGABAT 00001025 002 OF 002


(reftel). He estimated that there is enough gas and oil
outside of the disputed area and onshore to make Turkmenistan
extremely attractive to foreign companies.


7. (C) COMMENT. TNK-BP is one of only a handful of foreign
oil and gas companies that has committed the resources to
open and maintain an office in Ashgabat. TNK-BP admitted
that the Turkmen bureaucracy is extremely slow and tricky and
that the President must personally give the green light to
TNK-BP before any deals can be reached. Since TNK-BP has not
met with Berdimuhamedov in almost two years, TNK-BP does not
know where it stands. However, TNK-BP's strategy is simply
to maintain an office in Ashgabat for as long as necessary,
allowing the company to be ready on the ground if and when
Turkmenistan becomes more willing to do business with foreign
energy companies. END COMMENT.
MILES