TURKMEN PRESIDENT SHUFFLES OIL AND GAS OFFICIALS

C O N F I D E N T I A L SECTION 01 OF 02 ASHGABAT 001295

SIPDIS

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

E.O. 12958: DECL: 10/14/2019
TAGS: EPET ECON PGOV EINV BTIO TX
SUBJECT: TURKMEN PRESIDENT SHUFFLES OIL AND GAS OFFICIALS

REF: ASHGABAT

Classified By: Charge Sylvia Reed Curran for reasons 1.4 (b) and (d).


1. (C) SUMMARY. During an October 12 televised session with
fuel and energy officials, Turkmen President Berdimuhamedov
announced major firings and reshuffling of the oil and gas
leadership, citing waste and poor performance as reasons for
dismissals. The president prefaced his action by saying that
more than half of the country's investment, amounting to
billions of dollars, was devoted to the development of the
oil and gas sectors. He stated that "unfortunately, because
of the irresponsible approach of certain officials to their
duties, we did not receive the expected return on the large
investments made by the state in the gas and oil sectors."
He proceeded to fire some officials, berating them for "grave
shortcomings" in fulfilling their duties before dismissing
them in front of their colleagues on live television. The
president added that more of his personal attention will be
given to the oil and gas sectors to ensure that
Turkmenistan's oil and gas production goals are met by 2030.
END SUMMARY.

Minister of Oil and Gas to Head Turkmen Oil


2. (C) Minister of Oil and Gas Industry and Mineral Resources
Annaguly Deryayev was relieved of his post as Minister and
reassigned as the head of the state oil company Turkmennebit.
Deryayev had served as Minister since October 2008 and was
replaced by Oraznur Numuradov. Our Turkmen contacts noted
that Deryayev's appointment as the head of the state oil
company was considered a promotion, rather than a demotion,
as the position of head of the state oil company is
considered more prestigious. Our contacts also added that as
the head of the state oil company, Deryayev would also be
able to obtain more lucrative "personal benefits" in his new
position, as he would have more direct involvement in
commercial deals. Deryayev replaces Orazdurdy Hajymyradov,
who was reportedly reassigned back to the Oil and Gas Field
Initial Development Institute where he previously worked from
2007 until July 2009. Our contacts added that it was well
known that Hajymyradov's appointment as head of the state oil
company had been considered temporary.


3. (C) When describing the poor performance of the state oil
company, President Berdimuhamedov underscored that U.K.
company Burren Resources and other foreign companies
operating in Turkmenistan had used modern technology and
tools to exceed the production of the state oil company by
two times. He called for the state oil company to expedite
the use of modern technology, methodologies, and equipment in
order to increase production. The president noted that by
2030, Turkmenistan should be producing 100 million tons of
oil and 250 billion cubic meters (bcm) of gas per year.
Currently, the country produces about 10 million tons of oil
and 80 bcm of gas annually.

State-Owned Gas Company Turkmengaz


4. (SBU) The temporary head of the state-owned gas company
Turkmengaz, Dovlet Mommayev, was replaced by Nury Muhammedov.
The president cited Mommayev's health as the reason for his
transfer to another post; the president did not mention
Mommayev's new assignment. The president lauded the new head
of Turkmengaz Muhammedov as someone with years of fruitful
experience in the gas sector.

State Oil and Gas Construction Company


5. (C) Chairman of the State Oil and Gas Construction Company
Turkmennebitgazgurlushyk Atamurat Durdyev's firing appeared

ASHGABAT 00001295 002 OF 002


to be the harshest. On live television, the Turkmen
president accused Durdyev of contributing to a steep decline
in the work ethic among employees at the company, and for
constructing low-quality projects. The president referred to
Durdyev's earlier reprimand for failure to complete gas
infrastructure projects designed to supply gas to the public.
In addition, Durdyev had promised the president that the
Korpeje-Kurtkui gas pipeline to Iran would be completed by
December 2009 without the help of foreign companies. Sources
tell us, however, that progress on the pipeline is very slow.


6. (C) After describing Durdyev's failure and stressing that
Durdyev did not learn his lesson after he was reprimanded,
the president turned to Durdyev and stated: "...therefore, I
am relieving you, Durdyev, from your post for grave
shortcomings at work. You can leave now." (NOTE: It is
widely believed that those officials who are ordered to leave
the room by the president after being fired often get
collected by security officials; we have no information
regarding Durdyev at this time. END NOTE.) Durdyev was
replaced by Akmyrat Egeleyev.


7. (C) COMMENT. In the past, there has been frequent
turnover of officials in the oil and gas sector, given the
economic importance hyrocarbons play in providing revenue to
the state. Deputy Chairman for Oil and Gas Baymyrat
Hojamuhammedov and the Head of the State Agency for the
Management and Use of Hydrocarbon Resources Yagshygeldi
Kakayev remain unscathed from the recent shake up, with the
president putting the blame on other individuals. It is
possible that the president is allowing Hojamuhammedov more
say in choosing the people he supervises, and Kakayev seems
to have retained his position as a "favored son," for now.
Still, they and the new appointees will need to deliver
increased production and revenues in order to hold on to
their jobs, not an easy task given the current restrictions
on foreign investment and technologies. END COMMENT.
CURRAN