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Cablegate: Turkmenbashy Refinery Will Soon Produce More Jet Fuel

VZCZCXRO6347
PP RUEHAG RUEHAST RUEHBI RUEHCI RUEHDBU RUEHDF RUEHIK RUEHLH RUEHLN
RUEHLZ RUEHPW RUEHROV RUEHVK RUEHYG
DE RUEHAH #0967/01 2561030
ZNR UUUUU ZZH
P 131030Z SEP 07
FM AMEMBASSY ASHGABAT
TO RUEHC/SECSTATE WASHDC PRIORITY 9358
INFO RUCNCLS/ALL SOUTH AND CENTRAL ASIA COLLECTIVE
RUCNCIS/CIS COLLECTIVE
RUCNMEM/EU MEMBER STATES COLLECTIVE
RUEHAK/AMEMBASSY ANKARA 2750
RUEHBJ/AMEMBASSY BEIJING 0574
RUEHKO/AMEMBASSY TOKYO 0450
RUEHIT/AMCONSUL ISTANBUL 1033
RHEFDIA/DIA WASHDC
RHMFIUU/CDR USCENTCOM MACDILL AFB FL
RUEAIIA/CIA WASHDC
RHEHNSC/NSC WASHDC
RUEKJCS/JOINT STAFF WASHDC
RUEKJCS/SECDEF WASHINGTON DC
RHEBAAA/DEPT OF ENERGY WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC

UNCLAS SECTION 01 OF 02 ASHGABAT 000967

SIPDIS

SENSITIVE

SIPDIS

STATE FOR SCA/CEN, EEB
PLEASE PASS TO USTDA DAN STEIN

E.O. 12598: N/A
TAGS: PGOV EPET EINV ETRD MARR AF TX
SUBJECT: TURKMENBASHY REFINERY WILL SOON PRODUCE MORE JET FUEL


1. (U) Sensitive but unclassified. Not for public Internet.

2. (U) Charge called on Turkmenbashy Refinery General Director
Tagangeldi Mamedov September 11. Mamedov confirmed the refinery
currently produces 6M tons of refined petroleum products a year,
although the current capacity is 7.5M tons. When the second phase
of upgrading is finished in 2010, total capacity will be 10M tons.
The contractor for the second-phase upgrade, which is focused on new
equipment to refine an additional 2.5M tons/year of crude oil is
Emerol Ltd. of Ireland, which also oversees environmental issues at
the refinery.

U.S. COMPANY INSTALLING CAPACITY FOR JET FUEL

3. (U) Additionally, work is well advanced on a separate project at
the refinery to install structural and mechanical capacity to
produce high-quality jet fuel. The goal is to begin production by
Turkmenistan's Independence Day, October 27. Mamedov described the
project as a left-over from the Soviet period that Russia then tried
to resuscitate but eventually dropped.

4. (U) At the direction of former President Niyazov, Mamdeov went
to Houston, Texas, last year, he said, and signed a contract with
Merichem Chemicals and Refinery Services LLC to supply and install
the equipment that was shipped to Turkmenistan in modular form to be
assembled at the Turkmenbashy Refinery. According to Mamedov,
Merichem currently has a "chef de montage" on site, and will provide
on-going quality-control services once production begins.

5. (SBU) In reply to a question, Mamedov said the Refinery is not
opposed to new exclusive supplier contracts (for example, for jet
fuel to the U.S. military in Afghanistan), but generally prefers to
sell its production at auction on the Ashgabat "commodity exchange,"
because bidders tend to bid up the price over exclusive contracts
since the Turkmenbashy Refinery is known in the Former Soviet Union
and in Europe for producing world-standard finished products. In
this context, Mamedov noted sales to Afghanistan have increased
significantly in the past year, although he didn't have statistics
immediately at hand.

"NO ECOLOGICAL PROBLEMS"

6. (U) Mamedov acknowledged ecological concerns are a major issue
for the Turkmenbashy Refinery, especially since the
Berdimuhamedov-mandated "International Tourist Zone" will be built
near-by (septel). He said the refinery's current contract with
Emerol includes a significant ecological upgrade and monitoring
component, and maintained the refinery has no problem with
disposition of residual by-products because all are either sold
(including to RusAl in Russia and Talco in Tajikistan for aluminum
production) or re-refined into other commercial products such as
road-building asphalt or "polypropylene tape that is sold all over
Turkmenistan."

"NO SECURITY PROBLEMS"

7. (SBU) Likewise, Mamedov said he is satisfied with security at
the refinery. Merhav (Israel) installed the security system that
includes surveillance cameras and a closed-circuit TV monitoring
system. Merhav trained the extensive security force who are "young
guys specifically chosen and educated to be loyal."

SAYDI-II REFINERY STILL IN DRAFT STAGE

8. (SBU) Mamedov is also General Director of the Saydi Refinery on
the Uzbek border, on the opposite side of the country. Saydi's
current production is 2-4M tons/year, although capacity is 6M tons.
He acknowledged that President Berdimuhamedov and Vice Premier for
Oil and Gas Tachberdi Tagiyev had recently ordered Saydi be
upgraded. The general plan is to build a new refinery next to the
old one that would have a 3M-ton capacity. However, this is "only
in the planning stages." The new Saydi project would refine

ASHGABAT 00000967 002 OF 002


products from existing natural gas wells, rather than crude oil.
Mamedov re-emphasized that Saydi-II is only in "draft stage."

9. (U) The administrative buildings of the Turkmenbashy Refinery
are of obvious Soviet vintage. However, a Turkish construction
company is completing a new 10-story administrative building on the
premises. The superstructure is finished, and interior work is
under way.

10. (SBU) Mamedov was pleasant and business-like, although he was
unsure of the precise time of his appointment with the Charge, who
had to wander through the refinery's administrative headquarters on
his own trying to find Mamedov's office. He said he had received
only a "letter of permission" from the Cabinet of Ministers in
Ashgabat alerting him that "he was allowed to meet with the American
Ambassador during the September 11-13 time-frame."
HOAGLAND

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