TURKMENISTAN: 195 GAS WELLS SHUT DOWN AS RESULT OF

UNCLAS SECTION 01 OF 02 ASHGABAT 000686

SENSITIVE

SIPDIS

STATE FOR SCA/CEN; EEB
ENERGY FOR EKIMOFF/THOMPSON
COMMERCE FOR HUEPER

E.O. 12958: N/A
TAGS: EPET PGOV EINV TX RS
SUBJECT: TURKMENISTAN: 195 GAS WELLS SHUT DOWN AS RESULT OF
HALT IN GAS DELIVERY TO RUSSIA

REF: ASHGABAT 0462


1. (SBU) SUMMARY: A Turkmen official recently provided
further details about the impact on Turkmenistan of the
halt of gas exports to Russia. The information sheds light
on the damage that the dispute may be inflicting on
Turkmenistan's gas infrastructure. An astounding 195 gas
wells have been shut down, and a mid-level Oil and Gas
Ministry official assessed that the shutdown itself has
likely damaged many of the wells, and that they will be
costly to repair and make operational again. Some older
wells may be irreparable. Given the likely cost of this
dispute, and its seemingly prolonged nature, Turkmen
officials may choose to make more details on the situation
public to gain international support for their plight.
END SUMMARY.


2. (SBU) Dr. Odek Odekov, Director of the Turkmen Geological
Research Institute, said at the recent 2009 CIS Oil and Gas
Conference in Paris that Turkmenistan had to shut down 195
wells to halt gas exports to Russia following the April 9
blast at the Central Asia - Center 4 (CAC-4) gas pipeline
(reftel). Dr. Odekov also stated that Turkmenistan and Russia
are now in the process of negotiating the payment of damages
for the blast and might turn to international arbitration if
the issue is not settled in the course of negotiations.
(NOTE: Turkmenistan has already lost an estimated $1.8
billion, which is about 10 percent of the country's 2008 GDP,
based on the estimated volume of gas not delivered since
April 9. END NOTE)


3. (SBU) Reiterating the Government of Turkmenistan's
official version of events, Dr. Odekov blamed Gazprom's
subsidiary Gazpromexport for the blast. He emphasized that it
usually takes up to three days to prepare the gas production
and transportation facilities for a shut-off, whereas the
Russians gave only one-day notice. Dr. Odekov also mentioned
that the pipeline has been repaired and the flow could be
resumed after the two sides come to an agreement.


4. (SBU) A mid-level Oil and Gas Ministry official told local
pol/econ staff in a phone conversation that the numbers
provided by Odekov are realistic and that the pipeline was
fixed three or four days after the blast. The official also
mentioned that it will require significant labor resources and
time for Turkmenistan to restart the wells. Most of the gas
fields supplying the CAC-4 gas export system have been under
exploitation for more than twenty years, and the wells in
those fields fill with water if the wells are shut down for a
long time. To restart the wells, Turkmengaz engineers will
need to carry out a costly process that takes about three days
to clear the water out of the well, although the water-removal
work can be conducted on a number of wells simultaneously.
Also, it is possible that engineers will be unable to restart
some low-pressure wells.


5. (SBU) COMMENT: Turkmenistan remains committed to its
hard-line approach to the gas dispute, despite financial
losses caused by the gas stoppage. There is insufficient
information to estimate the cost of reversing the damage done
to Turkmenistan's gas production and transportation
infrastructure, but given the number of shut down wells, one
can guess that the cost will be substantial. It is the first
time that the Government of Turkmenistan has officially
mentioned the number of wells it had to shut down because of
the gas flow interruption. This gives us reason to believe
that the government might reveal more information about the
losses suffered if the dispute persists or becomes the subject

ASHGABAT 00000686 002 OF 002


of arbitration proceedings. END COMMENT.

MILES