ENGINEERING FIRM KBR PROSPECTING FOR WORK IN

C O N F I D E N T I A L ASHGABAT 000377 SIPDIS SCA/CEN; EEB PLEASE PASS TO USTDA DAN STEIN ENERGY FOR EKIMOFF/THOMPSON COMMERCE FOR HUEPER E.O. 12958: DECL: 03/24/2019 TAGS: PGOV EPET EINV TX SUBJECT: ENGINEERING FIRM KBR PROSPECTING FOR WORK IN TURKMENISTAN REF: 08 ASHGABAT 1590 Classified By: Charge Richard Miles, reasons 1.4 (b) and (d). ¶1. (C) On March 18, the Charge met with executives from the U.S. engineering and construction firm KBR, who came to Ashgabat to meet with Turkmenistan Government hydrocarbon sector officials. Although KBR has been active in Azerbaijan and Kazakhstan, supporting clients such as BP and Chevron, the company currently has no projects in Turkmenistan. With the major oil companies' increasing interest in Turkmenistan, the executives said it was natural for KBR to look for opportunities. They described the kinds of KBR services that the Turkmen Government could find useful. KBR's subsidiary, Granherne, provides front-end engineering consultancy services for onshore and offshore oil and gas development projects. They can advise state entities about how to structure production sharing agreements, as well as review oil company proposals. Granherne services dovetail with KBR's other offerings such as scenario analysis for development of deposits and recommendations concerning needed infrastructure. ¶2. (C) The KBR executives thought the Turkmen side was most interested in KBR's offshore expertise. Based on KBR's experience in Russia, the company's executives suggested that Turkmenistan has onshore experience, but no experience with offshore development. KBR hoped to highlight its experience and success in Azerbaijan in their meetings with Turkmen officials. Onshore production could also be a challenge for the Turkmen. Two weeks earlier, in a meeting with a Turkmenistan State Agency for the Management and Use of Hydrocarbons ("State Agency") official at the State Agency's office in London, the official admitted that the Turkmen "know nothing about drilling below 30,000 feet." ¶3. (C) On the following day, March 19, the KBR executives met with State Agency Director Yagshygeldy Kakayev and gave a presentation focused on the firm's upstream offshore services. They offered to help develop a master plan for offshore development including coastal support infrastructure. During the meeting, which lasted three hours, Kakayev suggested that there might be a possibility to sign an agreement for consulting services, but it was said "very softly." He added that KBR's proposal would need to be looked at by higher-level officials, for example, Deputy Chairman for Oil and Gas, Tachberdy Tagiyev, and by officials of various ministries. During the meeting, the most active Turkmen participant was a senior lawyer by the name of Ilmurad. The KBR executives also had a separate meeting with the Deputy Chairman of Turkmenkhimiya, the State chemical concern, who invited KBR to participate in the reconstruction of a chemical plant in Mary. KBR will prepare strategy documents for both its upstream, offshore services and the downstream project at the chemical plant. ¶4. (C) COMMENT: The Turkmen lack offshore experience and have failed to respond in a timely manner to offshore proposals submitted by foreign companies. KBR's services could help fill the experience/knowledge gap, providing sound guidance, or at least a reassuring second opinion, with respect to offshore deals. Moreover, the Turkmen have shown themselves ready to enter agreements with service providers, more so than with integrated oil companies, as evidenced by the number of U.S. service providers that currently operate here. The key to KBR landing a deal might be that the Turkmen side itself recognizes its need for the services offered. END COMMENT. MILES