Identifier
Created
Classification
Origin
09ASHGABAT262
2009-02-26 07:12:00
CONFIDENTIAL
Embassy Ashgabat
Cable title:  

TURKMENISTAN: GOVERNMENT MAY BE AVOIDING U.S. AND

Tags:  PGOV PREL EPET EINV TX 
pdf how-to read a cable
VZCZCXRO2920
PP RUEHAG RUEHBI RUEHCI RUEHDBU RUEHLH RUEHPW RUEHROV RUEHSR
DE RUEHAH #0262/01 0570712
ZNY CCCCC ZZH
P 260712Z FEB 09
FM AMEMBASSY ASHGABAT
TO RUEHC/SECSTATE WASHDC PRIORITY 2358
INFO RUCNCLS/ALL SOUTH AND CENTRAL ASIA COLLECTIVE PRIORITY
RUCNCIS/CIS COLLECTIVE PRIORITY
RUCNMEM/EU MEMBER STATES COLLECTIVE PRIORITY
RUEHAK/AMEMBASSY ANKARA PRIORITY 4858
RUEHBJ/AMEMBASSY BEIJING PRIORITY 2630
RUEHKO/AMEMBASSY TOKYO PRIORITY 2495
RUEHIT/AMCONSUL ISTANBUL PRIORITY 3102
RHMFISS/CDR USCENTCOM MACDILL AFB FL PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
RHEBAAA/DEPT OF ENERGY WASHDC PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
RUEHBS/USEU BRUSSELS PRIORITY
RHEHNSC/NSC WASHDC PRIORITY
RHEFDIA/DIA WASHDC PRIORITY
RUEAIIA/CIA WASHDC PRIORITY
RUEKJCS/JOINT STAFF WASHDC PRIORITY
RUEKJCS/SECDEF WASHDC PRIORITY
C O N F I D E N T I A L SECTION 01 OF 02 ASHGABAT 000262 

SIPDIS

SCA/CEN; EEB
PLEASE PASS TO USTDA DAN STEIN
ENERGY FOR EKIMOFF/THOMPSON
COMMERCE FOR HUEPER

E.O. 12958: DECL: 02/25/2019
TAGS: PGOV PREL EPET EINV TX
SUBJECT: TURKMENISTAN: GOVERNMENT MAY BE AVOIDING U.S. AND
ITALIAN ENERGY MAJORS

Classified By: Charge Richard Miles for reasons 1.4 (b) and (d).

C O N F I D E N T I A L SECTION 01 OF 02 ASHGABAT 000262

SIPDIS

SCA/CEN; EEB
PLEASE PASS TO USTDA DAN STEIN
ENERGY FOR EKIMOFF/THOMPSON
COMMERCE FOR HUEPER

E.O. 12958: DECL: 02/25/2019
TAGS: PGOV PREL EPET EINV TX
SUBJECT: TURKMENISTAN: GOVERNMENT MAY BE AVOIDING U.S. AND
ITALIAN ENERGY MAJORS

Classified By: Charge Richard Miles for reasons 1.4 (b) and (d).


1. (C) SUMMARY: The Bertling Amcit Logistic General
Manager, a longtime Ashgabat resident, shared news he had
heard about a potential new government policy on Italian and
U.S. energy majors being kept out of the running on field
development, and also shared his views on how to bring
Turkmenistan and the U.S. closer. He also shared information
about the large cash bribes that foreign companies have been
reported to pay to get a meeting with the Turkmen President
or to have a senior official advocate a business proposal.
If his news about Italian and U.S. majors is true, then those
companies will have to downsize their proposals and make them
more inviting to the Turkmen Government if they want to stay
in the game. Our contact's comments suggest that the road
ahead for U.S. energy companies will not become any easier
soon. END SUMMARY.

GOVERNMENT VOTES DOWN WORK WITH ITALIAN OR U.S. MAJORS


2. (C) Political Officer met again with the Bertling Amcit
Logistics General Manager on February 23 in the Embassy to
discuss sensitive topics that could not be covered in his
office. He was anxious to pass on to Post that he had
recently met with General Electric (GE) representatives to
work out the details of an arrangement in which Bertling will
be transporting GE technology to Turkmenistan as part of a
hydrocarbon sector contract. He reported that in the course
of conversation with the GE representatives, they told him
that Deputy Cabinet Chairman for Oil and Gas Tagiyev and his
staff had been instructed not to engage in any oil and gas
contract agreements with any major Italian or U.S. oil and
gas companies.


3. (C) Our contact speculated that this decision had been
made at the highest level, and had been made for a variety of
reasons. Turkmen officials, he said, were still angry about
onshore PSA holder Burren Energy's takeover by Italian energy
conglomerate ENI without the knowledge or approval of the

Turkmen Government. Our contact expressed the view that
Turkmen officials had decided to pass on all major U.S.
company offers for two reasons. The first, he argued, was
that the majors currently seeking access to the market have
not demonstrated their staying power in Turkmenistan by
setting up an office, seeking registration, or engaging in
other activities to show they planned to stay in
Turkmenistan. Nor have they delivered anything "to benefit
the Turkmen Government." The second reason related to Exxon
and Mobil's withdrawal from Turkmenistan in the 1990s.
(NOTE: The two companies had contracts to work the right
bank of the Amu Darya River, where China National Petroleum
Corporation currently has a PSA, and also for the site that
is now being worked by Burren/ENI. When Exxon and Mobil
merged, the decision was made to pull out of Turkmenistan,
leaving contracts incomplete in Turkmen eyes, and ill will in
their wake. END NOTE.)


4. (C) When Political Officer asked about the U.S. service
companies that have recently won service contracts to work at
various oil and gas fields, the Bertling Logistics General
manager argued that companies like Schlumberger, Weatherford
and Parker Drilling have a long record of reliability in
Turkmenistan, have "done things to benefit Turkmenistan" and
have earned the trust of the Government over time. Things
that qualify as "benefiting Turkmenistan" include sponsorship
of teams, cars, or organizations in a way that burnishes the
country's positive image abroad. They can also include
construction of a facility that promotes the country's social
or economic development. He suggested that many foreign

ASHGABAT 00000262 002 OF 002


companies begin here by successfully completing a small
development project at the outset.

THOUGHTS ON IMPROVING THE U.S.-TURKMEN BILATERAL RELATIONSHIP


5. (C) There is a way to turn around the Turkmen mindset
about U.S. firms, our contact said, through regular meetings
between senior U.S. Government officials and Turkmenistan's
diplomatic representatives at the UN in New York or at the
Embassy in Washington, DC. He claimed that Ambassador Meret
Orazov, who received a significant state award last week for
his work in Washington, has the respect and esteem of his
President. Turkmenistan's Permanent Representative to the
UN, Aksoltan Atayeva also received a state award. Presenting
American technical ingenuity and know-how to these
representatives, by means of a high-level relationship, would
enhance the U.S. image in the eyes of the Turkmen, and show
that Turkmenistan is important to the U.S., he said. In
addition, he opined that the U.S. Embassy's prestige in
Turkmenistan was being increasingly impaired by its more than
three-year lack of a permanent Ambassador.

COMMENTS ON HIGH-LEVEL CORRUPTION


6. (C) The Bertling Logistics General Manager also
addressed Political Officer's inquiries about how foreign
companies feed high-level corruption to gain market access in
Turkmenistan. He reported hearing rumors that some companies
had paid $15,000-$20,000 to win the advocacy and support of a
deputy chairman on behalf of a business proposal. A meeting
with the Turkmen President now costs about $300,000, and does
not guarantee a successful outcome. He said all
under-the-table payments are risky, as they can be very
expensive and lead to further payment requirements. He noted
that major commercial proposals that have a big price tag
demand large bribes to be seriously considered at the
presidential level. These bribes are now averaging about $1
million-$1.5 million, he said. He claimed that payments for
senior government officials are made using local legal or
commercial intermediaries who deliver cases of cash to an
official's designated representative or directly to a member
of the Presidential Apparatus. He said the legal entity,
BEREKET, has played the intermediary role in the past.


7. (C) COMMENT: It will take little time for the news to
spread around the oil patch here about a possible Government
decision to avoid contracts with big U.S. and Italian
companies. If what our contact says is true, and unless this
alleged policy is reversed, such companies will have to
downsize their proposals and be more creative in addressing
the concerns and interests of the Turkmen. Otherwise,
they'll never become more than also-rans in the competition
for access to Turkmenistan's hydrocarbon resources.


8. (C) COMMENT CONTINUED: We know that President
Berdimuhamedov wants to visit Washington this year. Should
the White House respond positively to this expression of
interest, ways could--and should--be found to use the
leverage thus provided to improve the access of the major
U.S. energy companies to President Berdimuhamedov and his
energy team. END COMMENT.
MILES