TURKMENISTAN: EXXONMOBIL PLANS TO STEP UP

C O N F I D E N T I A L ASHGABAT 000918

SIPDIS

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

E.O. 12958: DECL: 07/21/2019
TAGS: PGOV EPET EINV TX
SUBJECT: TURKMENISTAN: EXXONMOBIL PLANS TO STEP UP
ENGAGEMENT; OPEN LOCAL OFFICE

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


1. (C) On July 22, ExxonMobil officials called on the Charge
to discuss the company's current strategy for Turkmenistan.
Their visit to Ashgabat, for meetings with oil and gas sector
officials, was intended to raise ExxonMobil's profile with
the Turkmen. According to one company official, ExxonMobil
must step up its engagement with the Turkmen government in
order to have a chance to capture business opportunities. At
the same time, in order for ExxonMobil to invest in
Turkmenistan, it will have to be involved in a sizable
project. Although the company officials were aware that
their efforts would take time, they said ExxonMobil is
confident that this is a business that it wants to do and is
ready to move ahead. The company's regional experience in
neighboring Kazakhstan was also a positive factor in its
decision to pursue business in Turkmenistan.


2. (C) ExxonMobil recognizes the need to open a local office
in order to make progress on reaching an agreement with the
Turkmen government for an gas project. A company
representative "on the ground" would be better able to keep
abreast of the latest information about gas sector
developments. A local presence would also help build the
relationships that the company needs with Turkmen officials.
ExxonMobil would be willing to invest money up front in a
project unrelated to the gas sector that the Turkmen
government had identified as a priority in order to improve
the company's prospects.


3. (C) A company representative mentioned that there was a
"touch" of skepticism within ExxonMobil about whether the
Turkmen are serious or "just playing them." He thought the
U.S.-Turkmenistan Business Council had been useful from
ExxonMobil's perspective, and that it keeps ExxonMobil's
Washington staff busy. ExxonMobil hopes to arrange a meeting
with President Berdimuhamedov during his planned September
visit to New York to attend the UN General Assembly.


4. (C) Reports that Iran might become involved in the
development of the South Yolotan/Osman fields are a source of
"slight concern" for ExxonMobil, particularly if the Iranians
build a gas processing plant. Iranian involvement could
limit ExxonMobil's ability to operate there. A company
official had the impression that the Turkmen would pursue a
"patchwork quilt" approach to developing the South Yolotan
deposits, rather than implementing a comprehensive
development plan. Concerning the ongoing Turkmen-Russian
standoff, he believed that Gazprom is still offering a
relatively low price and noted that Gazprom officials had
made three visits to Ashgabat in recent weeks. He had also
heard that Total is pursuing offshore blocks in the Caspian.
French President Sarkozy's invitation to Berdimuhamedov to
visit France later this year was meant in part to support
Total's efforts.


5. (C) COMMENT: ExxonMobil might be getting more serious
about pursuing a venture in Turkmenistan. While the company
hesitated in the past, several of its competitors were active
in cultivating the Turkmen, opening local offices and
organizing study trips abroad. Despite this headstart,
ExxonMobil's competitors do not have much to show for their
efforts. In light of Turkmenistan's current dispute with
Russia and its possible opening up to Western companies,
ExxonMobil might be able to make up for lost time, especially
given the considerable resources it could bring to bear. END
COMMENT.
MILES