TURKMENISTAN: SOUTH KOREAN COMMERCIAL INTERESTS

UNCLAS SECTION 01 OF 02 ASHGABAT 000203 SENSITIVE SIPDIS SCA/CEN; EEB PLEASE PASS TO USTDA DAN STEIN ENERGY FOR EKIMOFF/THOMPSON COMMERCE FOR HUEPER E.O. 12958: N/A TAGS: PGOV EINV EPET KS TX SUBJECT: TURKMENISTAN: SOUTH KOREAN COMMERCIAL INTERESTS GROWING ¶1. (SBU) SUMMARY: South Korean Ambassador Chong Yul Kim described bilateral relations between his country and Turkmenistan as growing, although at a more modest pace than South Korean companies would prefer. Although Turkmen Government agencies have been engaged in commercial relationships with some South Korean companies for a while, the process by which other companies can expand their presence in Turkmenistan's market has been a slow one, even in the energy sector. Korea's National Oil Corporation is pursuing a Caspian energy project, but has been slowed by the cautious Turkmen bureaucracy. Nevertheless, South Korean companies appear to be determined to do business here. Ambassador Kim also mentioned his Embassy's recent complications regarding its diplomatic pouch. If the pursuits of South Korean businesses pay off, the South Korean commercial footprint in Turkmenistan could grow significantly. END SUMMARY. AN INCREASINGLY WARM BILATERAL RELATIONSHIP ¶2. (SBU) The Charge called on South Korean Ambassador, Chong Yul Kim, at the Asian country's modest Embassy space located in a small hotel on the south side of Ashgabat. Ambassador Kim described the expanding nature of South Korea's relationship with Turkmenistan. He noted Turkmen Parliament Chairman Nurberdiyeva's attendance at President Lee Myung-Bak's inauguration in February 2008, Prime Minister Han Seung-Soo's visit to Ashgabat in May 2008, and President Berdimuhamedov's official visit to South Korea in November ¶2008. DEVELOPING THE COMMERCIAL RELATIONSHIP ¶3. (SBU) The South Korea-Turkmenistan relationship has been developing steadily in recent years, especially in the energy and commercial sectors. Kim said the Korean National Oil Corporation (KNOC) was seeking to enter Turkmenistan's energy sector, and that Turkmen officials had asked KNOC officials to make an offshore proposal. KNOC is interested in doing so, but the corporation cannot prepare a proposal until it has geologic and seismic data for the blocks in which it is interested. Kim said that the data could be found in Baku, and company representatives believe the Turkmen State Geological Corporation has it, but efforts thus far to procure data have been unsuccessful. 
¶4. (SBU) The Hyundai Corporation has seen the most significant benefits of a growing relationship in recent years, he said. The company has begun delivering hundreds of Hyundai buses for the Turkmen public transit system, and has signed a contract for the delivery of about 300 cars for use as taxis. During meetings in the spring and fall of 2008, Turkmen officials encouraged Hyundai representatives to play a role in building a large, new seaport facility in Turkmenbashy. Turkmen officials are also pressing for a South Korean role in the development of the National Tourist Zone project at Avaza. Late last year, Kim said that he and some of his colleagues sought to organize a trip to see Avaza. Turkmen officials arranged a pleasant trip to visit the site that included briefings, tours, boat rides, and a visit to a nearby nature preserve. ¶5. (SBU) South Korean business representatives, looking to get a foot in the door in the energy sector, have suggested an energy transport project, Kim said, and have also proposed projects to expand and modernize the Turkmenbashy and Seydi oil refineries. However, while the refineries project was in negotiation, the Turkmen side abruptly terminated the ASHGABAT 00000203 002 OF 002 discussion without explanation. Kim said that the companies interested in these projects are waiting for the Turkmen side to give them feedback on their proposals, but they have not received any news. RECENT DIFFICULTY WITH DIPLOMATIC POUCH ¶6. (SBU) On the subject of Turkmen handling of diplomatic pouches, Kim mentioned that his Embassy had never had any issues until recently. On January 15, when South Korean Embassy staff went to the airport to pick up their first pouch of the new year, the head of airport customs told them to send a diplomatic note. Kim said the customs official told Korean Embassy representatives that one diplomatic pouch bag did not require a diplomatic note, but the arrival of additional bags and boxes would require it. The South Korean embassy sent a diplomatic note the following day to the customs office, and it appeared to have resolved the issue, Kim said. He opined that the firing of the Turkmen Customs Service Chief and appointment of a new one coincided with the event, and may have something to do with the pouch issue. ¶7. (SBU) COMMENT: South Korean commercial interest in Turkmenistan is clearly growing, and it appears South Korean representatives are increasingly finding favor in the eyes of Turkmen officials. Companies are ambitiously pursuing a variety of projects and opportunities, and seem determined to overcome Turkmen bureaucratic delays and information vacuums in order to get into the market. If the pursuits of these businesses pay off, the South Korean commercial footprint in Turkmenistan could grow significantly. END COMMENT. MILES