TURKMENISTAN: SCHLUMBERGER FACES PROBLEMS, BUT

C O N F I D E N T I A L SECTION 01 OF 02 ASHGABAT 001224 SIPDIS STATE FOR SCA/CEN; EEB; ENERGY FOR EKIMOFF/BURPOE/COHEN COMMERCE FOR EHOUSE E.O. 12958: DECL: 09/25/2019 TAGS: EINV EPET PGOV TX SUBJECT: TURKMENISTAN: SCHLUMBERGER FACES PROBLEMS, BUT STILL SUCCEEDS REF: ASHGABAT 425 Classified By: Charge d'Affaires Sylvia Reed Curran. Reasons 1.4 (B) a nd (D). ¶1. (C) SUMMARY: French-based petroleum service giant Schlumberger has been in Turkmenistan for ten years and does the majority of its work conducting training programs. They face many of the same issues that other foreign companies do, including worries over the safety and health of their employees and keeping up with new laws. They have found a competent local partner and they respect the Turkmen government's views, both of which have helped them succeed in a tough environment for foreign companies. END SUMMARY. ¶2. (C) Schlumberger representatives called on the Charge September 25 to give an overview of Schlumberger operations in Turkmenistan, the majority of which are located in Balkanabat (reftel). They mainly offer training services and support international oil companies that are investing in development. They have 300 employees in Turkmenistan, 250 of which are in Balkanabat. Approximately 75 percent of their employees are local, to comply with Turkmen law that permits no more than 30 percent of employees to be expatriates. In fact, the representatives said they purposely try not to exceed 25 percent foreign staff in order not to run the risk that Letter of Invitation requests would not be approved. ¶3. (C) Schlumberger faces the same problems as many other foreign companies in Turkmenistan, including keeping employees safe and healthy. One of their concerns was how to get flu vaccine for their employees before the winter. Vaccines have to be brought in, and there is probably only enough storage for 100-200 doses in Balkanabat, but they would need close to 1000. Their regional doctor is trying to get employees, particularly the expats, to Baku to get vaccinations there. ¶4. (C) Another common problem for companies, Schlumberger included, is ever-changing legislation. When Schlumberger first started working in Turkmenistan 10 years ago, the problem was that legislation did not exist to govern foreign business activities. Now, when new legislation is passed (including the revised Labor Code),it goes into effect immediately, with no grace period for the company to prepare for the new regulations. The Schlumberger representatives did mention that they were sometimes granted a few extra months to get into compliance with new laws. The grace period, however, is never extended. ¶5. (C) Schlumberger representatives noted that there is a competent work force in Turkmenistan and they have been lucky to find a local partner, NebitGeofizika, that has standards on a par with those of Schlumberger itself. They also claimed that corruption in Turkmenistan is not as bad as in Kazakhstan or Azerbaijan. Schlumberger does all of its training in English, and will send employees to intensive English classes if they do not have enough language to participate in the training. They have considered doing training in Azerbaijan, where language is not a problem. ¶6. (C) COMMENT: Schlumberger is an example of how important relationships are in doing business in Turkmenistan. Schlumberger has learned to develop a thick skin and adapt to rigid Turkmen business practices. In addition, large petroleum service companies like Schlumberger continue to position themselves for their own contracts with the GOTX, possibly putting themselves in competition with big, international oil and gas companies. Schlumberger seems to be doing relatively well because it has been in Turkmenistan for 10 years, works through a local partner, hires Turkmen ASHGABAT 00001224 002 OF 002 employees, and understands the local culture, including the importance of respect to the Turkmen. END COMMENT. CURRAN