TURKMENISTAN: U.S. ENERGY COMPANY SHOWS SAVVY IN

UNCLAS SECTION 01 OF 02 ASHGABAT 000244 SENSITIVE SIPDIS STATE FOR SCA/CEN, EEB ENERGY FOR EKIMOFF/BURPOE/COHEN E.O. 12958: N/A TAGS: BTIO ENIV ENRG EPET PGOV TX SUBJECT: TURKMENISTAN: U.S. ENERGY COMPANY SHOWS SAVVY IN PURSUING AN OIL DEAL REF: ASHGABAT 207 ASHGABAT 00000244 001.2 OF 002 ¶1. (U) Sensitive but Unclassified. Not for public Internet. ¶2. (SBU) SUMMARY: Executives of recently-formed, Houston-based TX Oil, whose directors include a son of the 41st U.S. President, met with Turkmen government officials, including President Berdimuhamedov, on February 24-25. The purpose of the meetings was to explore and advocate for possible business opportunities in Turkmenistan's oil sector. The company's directors were pleased with the tone of their high-level meetings. Still, the meetings were exploratory for both sides and the executives acknowledge the prospects for cooperation remain uncertain. END SUMMARY BACKGROUND ¶3. (SBU) One TX Oil director has considerable in-country experience, having previously worked closely with Schlumberger and Bridas in Turkmenistan. TX Oil is interested in pursuing three different options in Turkmenistan: i) An oil and gas deal on Turkmenistan's Caspian coast, emulating the onshore Production Sharing Agreement (PSA) Mobil once held; ii) An oil intensification deal that would bring TX Oil's technology and services to existing oil wells in order to improve production; company representatives claim this type of project could easily double Turkmenistan's oil production; and iii) A possible partnership with Buried Hill to develop the Serdar field in the disputed region of the Caspian (reftel). MEETING WITH THE PRESIDENT ¶4. (SBU) TX Oil directors, including a son of the 41st U.S. President, met with President Berdimuhamedov and several other Turkmen officials who deal with energy during their brief February 24-25 trip to Ashgabat. The purpose of the meetings was to explore and advocate for possible business opportunities in Turkmenistan's oil sector. They immediately recognized the emphasis on form over substance in Turkmenistan and were both surprised and impressed at the rapid pace of construction in the capital. TX Oil directors hope to first build a more personal relationship with Turkmen officials in hopes it will lead to some of the proposed projects mentioned above. ¶5. (SBU) According to the TX Oil directors, Berdimuhamedov had an impressive knowledge of the oil and gas sector in Turkmenistan. They commented that the President discussed specific projects and issues at a level of detail that even surprised Deputy Chairman for Oil and Gas Baymyrat Hojamuhammedov. The TX Oil officials were surprised by the amount of deference Hojamuhammedov showed to Berdimuhamedov during the meeting, constantly standing up when addressed and straightening his suit jacket. The presidential meeting was featured on the front page of "Neutral Turkmenistan" newspaper on the following morning (February 25). ¶6. (SBU) COMMENT: While TX Oil might be a newcomer in the oil business, its directors showed considerable savvy in their approach to doing business in Turkmenistan. Arranging a meeting with Berdimuhamedov has been well-nigh impossible for the major Western energy companies. Bringing somone with close ties to the U.S. political elite was also well-aimed to get Berdimuhamedov's attention. Finally the "wildcatter" aura of TX Oil is without a doubt far less intimidating to the Turkmen that the massive projects ASHGABAT 00000244 002.2 OF 002 proposed by the Western majors. If TX Oil is able to convince the Turkmen of the benefits of its technology, it might turn a positive introduction into a profitable business venture. END COMMENT CURRAN