TURKMENISTAN: CHEVRON EXPECTED MORE FROM MEETING

C O N F I D E N T I A L ASHGABAT 001253 SIPDIS STATE FOR SCA/CEN; EEB; NEA/IR ENERGY FOR EKIMOFF/BURPOE/COHEN COMMERCE FOR EHOUSE E.O. 12958: DECL: 10/01/2019 TAGS: EPET ECON PGOV EINV BTIO TX SUBJECT: TURKMENISTAN: CHEVRON EXPECTED MORE FROM MEETING WITH TURKMEN PRESIDENT REF: ASHGABAT 1159 Classified By: Charge Sylvia Reed Curran for reasons 1.4 (b) and (d). ¶1. (C) SUMMARY: Chevron was one of several U.S. companies that recently had face-to-face meetings with Turkmen President Gurbanguly Berdimuhamedov in New York on the margins of the UN General Assembly. The Chevron rep was visibly disappointed that the meeting did not result in a new onshore deal for the company, and he shared his frustration that Chevron had invested two years in Turkmenistan with "little to show for it." He repeated that Chevron "knew the drill" when it came to appealing to the Turkmen President's ego. The Chevron rep, nevertheless, stated that the company intended to push forward for now. However, he was not sure how long Chevron could stay committed to Turkmenistan, if the GOTX would not take serious steps toward a deal (reftel). END SUMMARY. NO DEAL IN NEW YORK ¶2. (C) Chevron's representative in Ashgabat met with Charge on September 30 to discuss Turkmen President Berdimuhamedov's recent meeting with Chevron's VP for Business Development in New York. The Chevron rep was unhappy about the Turkmen President's insistence on developing onshore hydrocarbon resources with state-owned companies during the New York meeting in September. The Chevron rep noted that the Chinase National Petroleum Company (CNPC) had an onshore production agreement, and felt that Chevron deserved access to onshore gas fields as well. He admitted that CNPC started "small" in Turkmenistan by repairing oil wells in Western Turkmenistan, and providing drilling equipment to Turkmen national gas and oil companies. It was only then that CNPC received a waiver of the Turkmen policy that bans foreign companies from onshore gas production. He argued that rumors abound in Ashgabat that the Chinese are getting "too big for their britches," and that GOTX officials had reported the Turkmen President had ordered a temporary freeze on contracts with Chinese companies. AN INVITATION FROM THE PRESIDENT ¶3. (C) Despite no obvious deliverable from the New York meeting with Berdimuhamedov, the Chevron rep added that the president invited Chevron's VP for Business Development to Ashgabat for Turkmenistan Independence Day festivities on October 27. He elaborated that although the VP for Business Development was not the CEO, the Turkmen president liked him and referred to the Chevron VP as "his cool, little brother," (since their birthdays are near each other) adding the two have met together about five times. ¶4. (C) The Chevron rep then surprisingly explained that the timing was not good for the Chevron VP, and Chevron planned to send a letter regretting the invitation of the president, or at best Chevron would try to send someone else. The Charge explained to the Chevron rep, that the personal relationship between the president and the Chevron VP had reached a high enough level that the Turkmen president personally extended an invitation to return to Ashgabat by the end of the month, and that if Chevron was truly serious about doing business in Turkmenistan, the company would reconsider the VP's attendance. Not attending could send a negative signal to the president, and might even be viewed as an insult. The Charge suggested that attending the Independence Day events at the president's request might even provide Chevron another opportunity to bring up its business proposal with Berdimuhamedov. ADDITIONAL POSITIVE SIGNS ¶5. (C) After mentioning that he was not sure how long Chevron could remain in the country if no deal was imminent, the Chevron rep admitted he did not fully realize the importance of the president's personal invitation and the significance it might have in keeping Chevron on the president's short list of favorite, foreign energy companies. In turn, he expressed Chevron's willingness to host the president in California, while admitting that a "President of Turkmenistan Day" in a California city might not be a bad idea, as it would be sure to get Berdimuhamedovs's attention. In addition, he reported he had a meeting with Deputy Chairman for Oil and Gas Baymyrat Hojamuhammedov to further discuss Chevron's proposal and was told that Chevron could request future meetings with Hojamuhammedov without a dip note from the Embassy. The Charge told the Chevron rep that this was an additional sign from the GOTX that it valued its relationship with Chevron. ¶6. (C) COMMENT. The Chevron rep's initial assessment regarding the success of the New York meeting with Berdimuhamedov was based on the notion that Chevron had paid its dues over the last two years; therefore, it deserved a deal with the GOTX in the nearest future. In reality, paying one's dues to the Turkmen involves a long-term commitment based on personal relationships, such as the one developing between Berdimuhamedov and the Chevron VP. It turns out, Chevron's recent reports regarding its progress toward a deal are extremely positive. Convincing U.S. companies of the importance of maintaining the forbearance and the thick skin necessary for doing business with the Turkmen, however, remains a challenge. END COMMENT. CURRAN