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