Cablegate: Turkmenistan Opens Its First Coastal Lpg Terminal

VZCZCXRO5405
PP RUEHIK
DE RUEHAH #1606/01 3481432
ZNR UUUUU ZZH
P 141432Z DEC 09
FM AMEMBASSY ASHGABAT
TO RUEHC/SECSTATE WASHDC 3900
INFO RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
RUCNCLS/ALL SOUTH AND CENTRAL ASIA COLLECTIVE
RUCNCIS/CIS COLLECTIVE
RUCNMEM/EU MEMBER STATES COLLECTIVE
RUEHAK/AMEMBASSY ANKARA 5997
RUEHBJ/AMEMBASSY BEIJING 3691
RUEHKO/AMEMBASSY TOKYO 3550
RUEHIT/AMCONSUL ISTANBUL 4239
RUCNDT/USMISSION USUN NEW YORK 1309
RHMCSUU/CDR USCENTCOM MACDILL AFB FL
RUEHVEN/USMISSION USOSCE 4178
RUEAIIA/CIA WASHDC
RHEFDIA/DIA WASHDC
RHEHNSC/NSC WASHDC
RUEKJCS/SECDEF WASHDC
RUEKJCS/JOINT STAFF WASHDC

UNCLAS SECTION 01 OF 02 ASHGABAT 001606

SENSITIVE

SIPDIS

STATE FOR SCA/CEN; EEB; NEA/IR
ENERGY FOR EKIMOFF/BURPOE/COHEN
COMMERCE FOR DSTARKS/EHOUSE

E.O. 12958: N/A
TAGS: EPET PGOV EINV TX IR
SUBJECT: TURKMENISTAN OPENS ITS FIRST COASTAL LPG TERMINAL

ASHGABAT 00001606 001.2 OF 002

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

2. (SBU) SUMMARY: On December 9, the Turkmen Government held
an opening ceremony for a liquefied petroleum gas (LPG)
terminal with the capacity of 200,000 tons per year built near
the village of Kiyanly on the Caspian coast. International
media outlets incorrectly called it an LNG terminal. The
terminal is part of the Turkmen Government's ambitious plans
to increase LPG production and exports from the Turkmenbashy
Oil Refinery. It is the first LPG terminal on the Caspian
coast and is the first LPG terminal in Turkmenistan that will
deliver LPG via maritime rather than land transportation. END
SUMMARY

3. (SBU) Some international media reported on the terminal
opening, wrongly calling it a liquefied natural gas (LNG)
terminal. The confusion was most likely caused by the fact
that the translation of the Russian term for "liquefied gas"
does not account for the differences between LNG and LPG. The
new terminal will ship LPG, which is a mixture of propane and
butane as opposed to natural gas which is mostly methane.

4. (SBU) In 2008, Turkmenistan produced 412,000 tons of LPG
and has plans to increase the LPG production up to two million
tons by 2020. The Turkmenbashy Oil Refinery accounts for
about 70 percent of the country's LPG production, whereas the
remaining 30 percent comes from another LPG plant located in
Nayip, Eastern Turkmenistan. Since more than 90 percent of
Turkmenistan's population receives natural gas through a
network of distribution pipelines, Turkmenistan exports the
lion's share of its LPG. Exports go mostly to Iran and
Afghanistan through railway and truck terminals located in
Turkmenbashy, Sarakhs, and Serhetabat.

5. (SBU) The Iranian Pars Energy Company, which constructed
the three onshore LPG terminals in the country, built the new
terminal according to a contract with the Turkmenbashy Oil
Refinery signed in 2008. The terminal is connected to the
Turkmenbashy Oil Refinery by means of two 26-kilometer
pipelines. It has an LPG storage facility with the capacity
of 3,000 tons and can service LPG tankers with payload
capacities of up to 3,000 tons. The terminal is scheduled to
be adapted to accommodate service ferries carrying railway
tank trailers. The Turkmen Government has further plans to
deepen the seabed near the terminal from five to seven meters,
in order to service larger ships.

6. (SBU) The Turkmen media did not specify the markets for
Turkmen LPG exports originating at the Kiyanly terminal.
Nevertheless, since an Iranian company constructed the
terminal and Iran has been a traditional consumer of Turkmen
LPG, it seems plausible that Iran could be the primary
destination for Turkmen LPG shipped from the Kiyanly terminal.

7. (SBU) It will probably take some time before the Kiyanly
terminal starts operating at full capacity. Since it is
the first LPG terminal on the Caspian coast, there is the
question of infrastructure needed to transport and off-load
seaborne LPG shipments. No information was published about
either LPG-suitable tankers on the Caspian, nor about
facilities in neighboring countries capable of off-loading LPG
from tankers. Also, Turkmenistan will need to increase its
production of LPG in order to keep all four of the country's
terminals busy.

8. (SBU) COMMENT: The Kiyanly LPG terminal has been hailed as
an important component of the Turkmen Government's program to
increase LPG production and exports. If and when Iran, or
Azerbaijan, builds an LPG import terminal, Kiyanly will play a

ASHGABAT 00001606 002.2 OF 002

crucial role in facilitating Turkmen LPG exports to Western
Iran and could also make Turkmen LPG more competitive in
Georgian and Armenian markets. END COMMENT

CURRAN

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