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

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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.
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