TURKMENISTAN: DEPUTY FOREIGN MINISTER SAYS DOOR

C O N F I D E N T I A L SECTION 01 OF 02 ASHGABAT 000692

SIPDIS

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

E.O. 12958: DECL: 06/04/2019
TAGS: PGOV EPET EINV TX
SUBJECT: TURKMENISTAN: DEPUTY FOREIGN MINISTER SAYS DOOR
IS OPEN FOR ENERGY PARTNERS, BUT ON TURKMEN TERMS

Classified By: Charge Richard Miles, reasons 1.4 (b) and (d).


1. (C) SUMMARY: On May 29, Deputy Foreign Minister, Toyly
Komekov, told members of the Morningstar delegation that the
door to Turkmenistan is open to foreign energy companies,
provided they respect Turkmen policies concerning the
development of its energy resources. He cited President
Berdimuhamdov's energy sector policies of diversification and
integration with the world economy. Komekov highlighted
large investments taking place in the energy sector and
stressed Turkmen interest in acquiring advanced technology
and training for its oil and gas cadres. Ambassador
Morningstar noted that, based on meetings with energy sector
chiefs, there appeared to be a way for the Turkman Government
and U.S. energy companies to reach agreement that would allow
foreign entities to operate onshore. He delivered the
message that the U.S. wants to see a strong, sovereign
Turkmenistan that controls the development of its resources
and achieves maximum production for the benefit of it people.
END SUMMARY.


2. (C) Special Envoy for Eurasian Energy Richard Morningstar
and his delegation met on May 29 with Deputy Foreign Minister
Toyly Komekov to discuss bilateral cooperation focused on
energy issues. Komekov hoped that Morningstar's meetings
earlier in the day with ministers and chiefs in the
hydrocarbon sector would give impetus to our future
relationship. He mentioned that responsibility for
concluding agreements with foreign energy companies lies with
the State Agency for the Management and Use of Hydrocarbon
Resources (State Agency). Komekov suggested that State
Agency Chairman, Yagshygeldi Kakayev, must have explained the
Turkmen position in detail. He said the officials in the oil
and gas sector are the experts that can best address concrete
issues of collaboration. Turkmenistan pursues an open door
policy, working with many large energy companies in Ashgabat
and the Caspian region. Onshore production is carried out in
cooperation with mostly European service companies. Komekov
mentioned President Berdimuhamedov's policies of
diversification of export routes and the integration of
Turkmenistan with the world community, especially with regard
to energy issues. Collaboration with foreign companies takes
place on a tender basis, with no restrictions regarding the
nationality of any company.


3. (C) Noting that economic development requires investment,
Komekov indicated that the pace of investment in the Turkmen
economy was quite large, especially in the energy sector.
Major investments were taking place both in the Caspian and
onshore. He mentioned the long term contract with China
National Petroleum Company (CNPC) on a production sharing
agreement (PSA) basis, and CNPC's development and extraction
of gas on the right bank of the Amu Darya. Looking ahead,
Turkmen priorities are obtaining the lastest technologies and
training its oil and gas cadres. Each year, more that 1,000
Turkmen students study subjects related to oil and gas at
state expense in foreign countries. Komekov suggested that
it would be welcome if the U.S. could support such training,
perhaps by offering a designated quota of Turkmen students to
study at U.S. institutions of higher education specialized in
oil and gas.


4. (C) Morningstar mentioned that, based on his earlier
meetings, it appeared that there was a significant
opportunity for U.S. companies to assist the Turkmen side to
build up gas production. While both the U.S. Government and
U.S. energy companies understand that the Turkmen Government
was not willing to offer PSAs for onshore gas production, it
appeared that "service contracts" could involve risk and some
degree of joint operation as long as the Turkmen Government
maintains control over its assets, a position that

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Morningstar noted was encouraging. This approach could
provide an opening for energy companies and the Turkmen
Government to enter into new types of agreements that would
meet each side's needs and be mutually beneficial.


5. (C) Citing two U.S. interests with regard to Turkmen
energy, Morningstar emphasized that the U.S. wanted to see
Turkmenistan continue to develop as a strong, sovereign state
that can make its own decisions about the development of its
resources. At the same time, Turkmen gas production should
be maximized for Turkmenistan's benefit and also for the
benefit of gas consumers internationally. The U.S.
Government stands ready to trade ideas and work as a partner
in the achievement of these goals.


6. (U) Special Envoy Morningstar cleared this cable.
MILES