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