TURKMENISTAN: INTERNATIONAL OIL SERVICES COMPANY

C O N F I D E N T I A L SECTION 01 OF 02 ASHGABAT 000425 SENSITIVE SIPDIS SCA/CEN; EEB PLEASE PASS TO USTDA DAN STEIN ENERGY FOR EKIMOFF/THOMPSON COMMERCE FOR HUEPER E.O. 12958: DECL: 04/02/2019 TAGS: PGOV EPET EINV TX SUBJECT: TURKMENISTAN: INTERNATIONAL OIL SERVICES COMPANY THRIVING IN BALKANABAT Classified By: Deputy Chief of Mission Sylvia Reed Curran. Reasons 1.4 (b) and (d). ¶1. (C) SUMMARY: A visit to oil services company Schlumberger's Balkanabat operations base demonstrated that the company is doing well, providing a range of services to mostly foreign customers operating in the area. The company is expanding its operations and is anticipating growth in its international and local workforce to keep up with the pace. The kind of work this company is doing is just what the Turkmenistan Government needs if it wants to limit foreign involvement to service contracts, because much of the technology it employs focuses on efforts to reduce the costs of developing wells while promoting efficiency and increasing output. However, getting government buy-in regarding these high-tech tools, imaging and modern Western construction techniques may have to wait until officials understand and accept them. END SUMMARY. ¶2. (C) On March 31, poloff visited hydrocarbon services company Schlumberger's Balkanabat base, from which the majority of its operations in Turkmenistan are managed and some 320 personnel perform service, construction, and maintenance operations at dozens of fields in Balkan province. General manager Patrick Van de Slijke showed poloff around the base, which contains housing for expatriate staff, a cafeteria, recreation areas, workshops, equipment maintenance and storage, as well as administrative offices. (NOTE: Although Schlumberger's headquarters and CEO sit in Houston, Texas, the company is now officially registered in Curacao. END NOTE.) ¶3. (C) He noted that Schlumberger has a very acceptable satellite internet connection that the government recently allowed them to expand. He said the government permitted the company to expand its bandwidth with very little red tape, largely because the company has long enjoyed a good reputation in Turkmenistan. The company also recently expanded the footprint of the base when a neighboring enterprise agreed to lease its adjoining land to Schlumberger. Van de Slijke showed poloff a handful of new housing facilities and 10-12 new office work stations that will accommodate additional local and expat staff he is expecting to bring in later this year. One of the company's strong points in regard to Turkmenistan is that Schlumberger has a strong and reliable logistics system that serves a number of countries around the Caspian, so the supply chain getting materials into the country is fairly consistent. ¶4. (C) Van de Slijke showed off the range of high-tech tools the company uses at new and old oil wells that can do everything from identify the geological elements in and around the reservoir, the quality of the reservoir's contents, its exact location and shape, pressure, presence of radon or other gases, or even radiation, to name a few. Much of what Schlumberger does in Turkmenistan is drilling optimization and measurements, as well as a variety of well services that establish solid subterranean infrastructure that will ensure that the well operates in an efficient and productive fashion, he noted. The company also provides its mostly foreign customers with real-time evaluative data, interpretation services and digital imaging that help the customers make decisions about well construction and broader field development issues. ¶5. (C) Van de Slijke said that the biggest challenges on a day to day basis are maintaining stringent safety practices to prevent dangerous work accidents that can be so deadly in ASHGABAT 00000425 002 OF 002 the hinterlands of Turkmenistan. The company has tight safety rules for everyone from drivers to workshop technicians. It treats small violations very seriously to underscore the importance of safety. Such rules, he said, are critical, because the failure to do reliability checks on heavy equipment or to maintain appropriate speeds on the rough roadways here all have deadly implications. Heavy equipment is routinely tested for strength and reliability to prevent dangerous breakages in the field, he added. ¶6. (C) All of the oil that is extracted in Balkan province is transported via capillary pipelines to the Turkmenbashy refinery. He said that where there is no infrastructure for processing or transporting natural gas, it is flared off. He knew of no plans to build gas processing facilities in the Balkanabat area. He added with amusement that not far from the base, there is an old oil well that Turkmen State Oil Concern never capped off properly, and the escaping natural gas has been on fire for several years, because no one cares. ¶7. (C) COMMENT: The Schlumberger base is an exemplar of what it takes to do oil and gas services work in Turkmenistan's outback. The company has developed a self-sufficient base that, over time, has produced a cadre of skilled local technicians and a stockpile of equipment and technology capable of providing a range of sophisticated services to customers all across the region. Companies like this could provide the kind of consulting services state enterprises need to improve the efficiency and production rates at the wells they operate, but this is unlikely to happen until state enterprise officials develop a better understanding of modern technologies and techniques. END COMMENT. MILES