TURKMENISTAN: HOW MUCH OF CHINA IS TOO MUCH?

UNCLAS ASHGABAT 001249

SENSITIVE

SIPDIS

STATE FOR SCA/CEN; EEB; NEA/IR
ENERGY FOR EKIMOFF/BURPOE/COHEN
COMMERCE FOR EHOUSE

E.O. 12958: N/A
TAGS: EPET PGOV EINV TX
SUBJECT: TURKMENISTAN: HOW MUCH OF CHINA IS TOO MUCH?

REF: ASHGABAT 0815


1. (U) Sensitive but unclassified. Not for public Internet.


2. (SBU) SUMMARY: The Chinese presence and the number of Chinese
citizens living and working in Turkmenistan have traditionally been
related to business activities conducted here by the Chinese
National Petroleum Corporation (CNPC). As CNPC and its subsidiaries
have expanded their business in Turkmenistan, the number of Chinese
residents has increased. Currently, the Chinese represent one of
the largest expatriate groups in Turkmenistan, residing at the
company's field bases as well as in Turkmenistan's cities, including
Ashgabat. There are indications that the Turkmen government is
getting concerned about the large number of Chinese in the country,
and there is a growing discontent about CNPC among its local
employees. END SUMMARY.


3. (SBU) CNPC first appeared in Turkmenistan in 2002, when the
company won contracts to provide well repair and gas production
stimulation services in Turkmenistan's western region. In 2007,
CNPC signed a production sharing agreement with the Turkmen
government (reftel) to explore and develop gas fields on the right
bank of the Amu Darya River, which caused sharp growth in the number
of Chinese in the country. Reportedly, about 3,500 Chinese workers
are involved in the Amu Darya Project (Lebap Province) alone. A
significant number of Chinese citizens are involved in drilling
services conducted by CNPC for Turkmengaz at the South Yoloten gas
field located in Mary Province. CNPC has a field base in Balkan
Province, where the company still carries out well repair and
drilling services, and the company's head office is located in
Ashgabat.


4. (SBU) The Chinese do not usually interact with locals because of
the language barrier and are generally considered to behave more
quietly than other expatriates. As a result, there have not been
any conflicts between the Chinese and locals in everyday life. The
situation in work-related relations between the Chinese and locals
has been quite different. Many of CNPC's local employees complain
about poor working conditions, low salaries, and unjust treatment by
the Chinese. These factors caused a clash between Chinese and
Turkmen workers that reportedly happened in South Yoloten on
September 12. The clash resulted in 15 injured Chinese workers who
were hospitalized, and the police detained about 200 locals. A few
days after the clash, the local police raided discos and night clubs
in Ashgabat, detaining the Chinese and reportedly instructing them
not to attend entertainment places for a while.


5. (SBU) There seems to be a growing concern among Turkmen
government officials over the increasing Chinese presence in the
country. Reportedly, the government is not happy about
Turkmenistan's growing dependence on Chinese equipment, especially
in the energy sector, and is going to limit the procurement of
Chinese machinery, which has flooded Turkmenistan since 2007.
Moreover, there are rumors that Turkmen officials have been
unofficially instructed to limit new deals with Chinese companies to
the extent possible.


6. (SBU) COMMENT: Although Turkmenistan will remain strongly
connected to China for a long time due to the soon-to-open Central
Asia-China gas pipeline and a four billion dollar loan recently
provided by the Chinese government to Turkmenistan (reftel),there
are grounds to suppose that the Turkmen government's honeymoon with
China is coming to an end. While there will most likely not be a
sharp change in the Turkmenistan-China relations, the Turkmen
government will probably try to gradually curb Chinese business
activity in the country. END COMMENT.

CURRAN