Identifier
Created
Classification
Origin
09ASHGABAT1283
2009-10-09 10:13:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Ashgabat
Cable title:
TURKMENISTAN: OFFSHORE REGISTERED COMPANIES NEED NOT APPLY
how-toVZCZCXRO6554 PP RUEHIK DE RUEHAH #1283 2821013 ZNR UUUUU ZZH P 091013Z OCT 09 FM AMEMBASSY ASHGABAT TO RUEHC/SECSTATE WASHDC 3596 INFO RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY RUEATRS/DEPT OF TREASURY WASHDC PRIORITY RUCNCLS/ALL SOUTH AND CENTRAL ASIA COLLECTIVE RUCNCIS/CIS COLLECTIVE RUCNMEM/EU MEMBER STATES COLLECTIVE RUEHAK/AMEMBASSY ANKARA 5769 RUEHBJ/AMEMBASSY BEIJING 3481 RUEHKO/AMEMBASSY TOKYO 3345 RUEHIT/AMCONSUL ISTANBUL 4012 RUCNDT/USMISSION USUN NEW YORK 1192 RHMCSUU/CDR USCENTCOM MACDILL AFB FL RUEHVEN/USMISSION USOSCE 3988 RUEAIIA/CIA WASHDC RHEFDIA/DIA WASHDC RHEHNSC/NSC WASHDC RUEKJCS/SECDEF WASHDC RUEKJCS/JOINT STAFF WASHDC
UNCLAS ASHGABAT 001283
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: OFFSHORE REGISTERED COMPANIES NEED NOT APPLY
UNCLAS ASHGABAT 001283
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: OFFSHORE REGISTERED COMPANIES NEED NOT APPLY
1. (U) Sensitive but unclassified. Not for public Internet.
2. (SBU) The two latest tender announcements published on the
Turkmenistan Oil and Gas Ministry's website contained a bracketed
note saying that tender bids from companies registered in offshore
zones or possessing banking accounts in those zones will not be
accepted. This provision confirms a rumor that started circulating
in Turkmenistan about a month ago stating that the Turkmen
government was going to exclude offshore registered companies from
supplying spare parts and equipment for Turkmenistan's oil and gas
industry.
3. (SBU) According to a Ministry of Oil and Gas official, the
government is serious about curbing the presence of offshore
registered companies in the oil and gas equipment and materials
market, although no official regulations have been issued to this
effect so far. She opined that the government is pursuing two
goals: to remove some of intermediaries from the market; and to
force some suppliers to register in Turkmenistan and keep their
accounts in Turkmen banks.
4. (SBU) The presence of intermediary offshore companies in this
market is caused by different approaches to payment by Turkmen state
oil and gas companies, on one hand, and many equipment producers, on
the other. Many of the latter request direct, upfront partial
payment, whereas the former can pay only through letters of credit
or upon delivery of the goods, according to Turkmen government
regulations. Intermediary offshore companies are much more flexible
and agree to receive payment after equipment is delivered. Another
factor favoring the use of intermediary offshore companies is that
they agree to designate a local Turkmen court as a court of
arbitration in their contracts, whereas equipment producers
typically designate a third-country court as a court of arbitration.
Finally, as a rule, offshore companies operating in Turkmenistan
often resort to corruption.
5. (SBU) The oil and gas industry equipment and spare parts market
is one of the most profitable and, reportedly, corrupt markets in
Turkmenistan with millions of dollars in turnover. The market
players are a very narrow circle of persons who have direct access
to the main decision makers in the country's energy industry. This
narrow circle controls the lion's share of the market and regularly
wins supply contracts thanks to their good connections with
government officials.
6. (SBU) COMMENT: On one hand, the Turkmen government's exclusion
of offshore companies might indicate its intention to make this
business more transparent and minimize corruption to the extent
possible. On the other hand, this idea might have been initiated by
a group of people who simply want to re-divide the market and bring
in new players, thus getting a bigger piece of the pie. END
COMMENT
CURRAN
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: OFFSHORE REGISTERED COMPANIES NEED NOT APPLY
1. (U) Sensitive but unclassified. Not for public Internet.
2. (SBU) The two latest tender announcements published on the
Turkmenistan Oil and Gas Ministry's website contained a bracketed
note saying that tender bids from companies registered in offshore
zones or possessing banking accounts in those zones will not be
accepted. This provision confirms a rumor that started circulating
in Turkmenistan about a month ago stating that the Turkmen
government was going to exclude offshore registered companies from
supplying spare parts and equipment for Turkmenistan's oil and gas
industry.
3. (SBU) According to a Ministry of Oil and Gas official, the
government is serious about curbing the presence of offshore
registered companies in the oil and gas equipment and materials
market, although no official regulations have been issued to this
effect so far. She opined that the government is pursuing two
goals: to remove some of intermediaries from the market; and to
force some suppliers to register in Turkmenistan and keep their
accounts in Turkmen banks.
4. (SBU) The presence of intermediary offshore companies in this
market is caused by different approaches to payment by Turkmen state
oil and gas companies, on one hand, and many equipment producers, on
the other. Many of the latter request direct, upfront partial
payment, whereas the former can pay only through letters of credit
or upon delivery of the goods, according to Turkmen government
regulations. Intermediary offshore companies are much more flexible
and agree to receive payment after equipment is delivered. Another
factor favoring the use of intermediary offshore companies is that
they agree to designate a local Turkmen court as a court of
arbitration in their contracts, whereas equipment producers
typically designate a third-country court as a court of arbitration.
Finally, as a rule, offshore companies operating in Turkmenistan
often resort to corruption.
5. (SBU) The oil and gas industry equipment and spare parts market
is one of the most profitable and, reportedly, corrupt markets in
Turkmenistan with millions of dollars in turnover. The market
players are a very narrow circle of persons who have direct access
to the main decision makers in the country's energy industry. This
narrow circle controls the lion's share of the market and regularly
wins supply contracts thanks to their good connections with
government officials.
6. (SBU) COMMENT: On one hand, the Turkmen government's exclusion
of offshore companies might indicate its intention to make this
business more transparent and minimize corruption to the extent
possible. On the other hand, this idea might have been initiated by
a group of people who simply want to re-divide the market and bring
in new players, thus getting a bigger piece of the pie. END
COMMENT
CURRAN