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PP RUEHAG RUEHBI RUEHCI RUEHLH RUEHPW RUEHROV
DE RUEHAH #0453/01 1020652
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P 110652Z APR 08
FM AMEMBASSY ASHGABAT
TO RUEHC/SECSTATE WASHDC PRIORITY 0579
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RUEHAD/AMEMBASSY ABU DHABI PRIORITY 0287
RUEHAK/AMEMBASSY ANKARA PRIORITY 3610
RUEHBJ/AMEMBASSY BEIJING PRIORITY 1428
RUEHKL/AMEMBASSY KUALA LUMPUR PRIORITY 0092
RUEHKO/AMEMBASSY TOKYO PRIORITY 1295
RUEHIT/AMCONSUL ISTANBUL PRIORITY 1864
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RHEBAAA/DEPT OF ENERGY WASHDC PRIORITY C O N F I D E N T I A L SECTION 01 OF 03 ASHGABAT 000453 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR SCA/CEN, EEB 
PLEASE PASS TO USTDA DAN STEIN 
ENERGY FOR EKIMOFF/THOMPSON 
COMMERCE FOR HUEPER 
 
E.O. 12958: DECL: 04/10/2018 
TAGS:        
SUBJECT:  TURKMENISTAN:  FOR CHEVRON, IT'S NOW A MATTER OF 
TRUST 
 
REF: ASHGABAT 0415 
 
Classified By: CDA Richard E. Hoagland:  1.4(B), (D). 
 
 1.  (C) SUMMARY:  According to Chevron's country manager, 
Chevron's April 5 presentation to officials from 
Turkmenistan's hydrocarbon sector (reftel) went smoothly, but 
Turkmenistan is still unwilling to come to the table to 
negotiate the company's bid to work onshore sub-salt gas 
fields.  While the Executive Director of the State Agency for 
Management and Use of Hydrocarbon Resources, Bayrammurat 
Muradov, characterized Chevron's presentation as 
"interesting," he asked that Chevron provide more information 
on how Chevron applies its processes and technology to its 
drilling.  Muradov raised some concerns about Chevron's 
unwillingness to leave behind proprietary information, which 
left the country manager wondering if this was evidence that 
the government would not find his company a trustworthy 
partner.  Muradov is willing to give Chevron a chance to do a 
second presentation, probably in May.  Although frustrated 
with the government's unwillingness to come to the table, 
Chevron is already considering next steps, including the 
possibility of providing a road trip, with which to address 
Muradov's latest questions.  But Under Secretary Jeffery 
could play a helpful role during his April 20-22 visit in 
determining whether Muradov's hesitation is due merely to a 
different business culture, or whether there are other issues 
at stake.  END SUMMARY. 
 
 2.  (C) During an April 9 meeting with EmbOff, Chevron 
country manager Doug Uchikura said that Chevron's April 5 
presentation to officials from Turkmenistan's hydrocarbon 
sector (reftel) had occurred as planned.  Chevron was given 
three hours, rather than the planned two, to make its case to 
over 30 officials from throughout Turkmenistan's hydrocarbon 
bureaucracy.  Although Deputy Chairman of the Cabinet of 
Ministers for Oil and Gas Tachberdi Tagiyev did not attend, 
his assistant did, as did Muradov, Deputy Minister of Oil and 
Gas Nedirov and Turkmengaz Chairman Kakayev and his deputy 
(Kakayev stayed only for an hour). 
 
MURADOV'S FEEDBACK:  TOO WEIGHTED ON PROCESS AND THEORY 
 
 3.  (C) During an April 8 meeting with Uchikura, Muradov said 
that the presentation had been interesting, and the State 
Agency now understood that Chevron has extensive exploration 
expertise.  Although Chevron's presentation had been weighted 
toward process and theory, there was not enough information 
on "practical application."  Turkmenistan wants a clearer, 
more direct sense of how Chevron applies its processes and 
technology to its drilling.  Muradov said he has asked those 
attending the April 5 presentation to send him specific 
questions about the presentation, but could not tell Uchikura 
when the State Agency would pass the questions to Chevron. 
 
"NO PROBLEM WITH ACCESS TO RESOURCES...IF WE TRUST YOU" 
 
 4.  (C) According to Uchikura, Muradov said that the 
government is willing to give access to the country's 
resources to those companies with which it feels comfortable. 
 (NOTE:  According to Uchikura, in making this statement, 
Muradov did not add any of the usual qualifications, such as 
distinguishing between offshore and onshore production.  END 
NOTE.)  Muradov expressed concern that Chevron was not being 
completely transparent because it would not leave some of the 
information that it had discussed during the presentation. 
In addition, the presenters failed to answer some questions 
about Chevroil's Tengiz operations as directly as the State 
Agency had hoped.  (NOTE:  Uchikura told emboff that the 
 
ASHGABAT 00000453  002 OF 003 
 
 
information that the State Agency had wanted Chevron to leave 
was business confidential, and the presenters had not 
answered the questions on Tengiz because none of them had 
been directly involved in the Tengiz operations.  END NOTE.) 
This issue of transparency is important, Muradov continued, 
because Turkmenistan wants to know that it can trust any 
future partners.  If Chevron withholds information from the 
government now, it could become even worse if/when the two 
become partners. 
 
CHEVRON NOW ONE OF FIVE INTERESTED IN ONSHORE OPS 
 
 5.  (C) Muradov reiterated that the government is seeking 
similar information on technical capabilities from Shell, BP, 
Lukoil, and Total, all of which have expressed similar 
interest in working onshore in the Amu Darya basin.  (NOTE: 
Uchikura said that Muradov did not mention either ExxonMobil 
or ConocoPhillips, nor did he give any indication of how far 
along these other four companies' proposals were.  Uchikura 
said Tagiyev and Muradov would get a chance to see Total's 
facilities during their April 9-10 visit to Paris, and a look 
at BP during their trip to London for the April 17-18 "Oil 
and Gas in Turkmenistan Conference."  END NOTE.) 
 
TURKMENISTAN WILLING TO CONSIDER A JOINT VENTURE? 
 
 6.  (C) Uchikura said that Muradov also hinted that the 
government might be interested in a joint venture (JV) 
arrangement, but it would have to feel comfortable with the 
company.  Turkmenistan has some hesitancy about JVs, because 
it has been "burnt" once before.  (COMMENT:  Muradov was 
probably referring to Turkmenistan's early 1990s arrangement 
with Bridas, which has still not been resolved.  END 
COMMENT.)  Muradov added that it is particularly important 
for the State Agency to get a clearer sense of how Chevron 
applies its processes and technology if the State Agency is 
to be convinced to choose Chevron over its peers -- all the 
more so because Chevron is unwilling to accept a service 
contract arrangement. 
 
CHEVRON TO GIVE A SECOND PRESENTATION 
 
 7.  (C) Muradov also asked why Chevron had chosen to delay 
its discussion of a Wood-MacKenzie gas market presentation 
that it had initially planned also to give on April 5.  When 
Uchikura told him that Chevron had been unable to get Letters 
of Invitation for the Wood-MacKenzie presenters in time for 
the meeting, Muradov agreed to schedule a second presentation 
once he returns from London. 
 
 8.  (C) Uchikura said he believed that Muradov is seizing on 
the issues of trust and practical application as a way of 
side-stepping a decision to begin talking in earnest about 
Chevron's bid.  Uchikura expressed frustration with Muradov's 
coy "focus on the moment."  However, he and EmbOff worked 
through a number of possible next steps, including: 
 
-- Obtaining more information about Turkmenistan's plans and 
priorities regarding foreign investment in the hydrocarbon 
sector during the London hydrocarbon conference. 
 
-- Preparing presentations for a three-hour meeting with a 
Turkmen technical delegation scheduled for April 23 that are 
light on process and seismic imaging, but heavy on practical 
applications of Chevron's sub-salt, high-pressure, 
high-temperature, high-sulphur drilling and producing 
capabilities. 
 
-- Developing a "field trip" to some of Chevron's drilling 
 
ASHGABAT 00000453  003 OF 003 
 
 
facilities for up to ten Turkmen officials that would give 
them hands-on exposure to the practical application of 
Chevron's integrated processes, technical expertise and 
drilling and producing operations to demonstrate precisely 
how Chevron would approach implementation of each phase of 
its Amu Darya basin sub-salt proposal. 
 
-- Working at developing trust by responding to all the 
questions Chevron receives from Muradov and by following 
through -- likely in May -- on the presentation of the 
Wood-MacKenzie study. 
 
 9.  (C) COMMENT:  We believe what we are seeing is two 
different cultures, each with its own priorities, working at 
cross-purposes.  Chevron's goal is to bring Turkmenistan into 
negotiations quickly in order to get a definitive answer on 
its bid.  Chevron had placed high hopes that its April 5 
presentation would be the key to bringing Turkmenistan to the 
table.  Even if Turkmenistan has decided that it is willing 
to allow foreign companies to work onshore, as Muradov's 
words to Uchikura suggest, it is still in no hurry to make 
what it sees as a serious commitment.  It would rather survey 
the field to find the partner it is most comfortable with 
before seeking to negotiate the best deal it can.  Muradov's 
words about "trust" are serious and are a natural outgrowth 
of Turkmenistan's culture, which is based on personal 
relationships.  With other foreign companies apparently 
closing in, however, Chevron's concerns are understandable. 
 
 10.  (C) COMMENT CONTINUED:  Despite Uchikura's frustration 
with the State Agency, Chevron remains -- as far as we are 
aware -- further along in its bidding process than any other 
competitor that Muradov mentioned.  The fact that Muradov is 
giving Chevron a chance to do a second proposal is positive, 
as is the fact that Muradov was willing to give as much 
detailed feedback to the first briefing as he did.  We 
believe that many of Chevron's proposed next steps are 
positive:  just the fact that Chevron is prepared to 
demonstrate its responsiveness to Turkmenistan's concerns 
should help to build the trust that Ashgabat values. 
However, we believe that Under Secretary Jeffery during his 
April 20-22 visit could play a helpful role in determining 
whether Muradov's unwillingness to commence negotiations is 
focused on buying more time to survey the field, or whether 
there are other factors at work.  END COMMENT. 
HOAGLAND