Interview With Conway Irwin of Argus Media

DEPUTY ASSISTANT SECRETARY MANN: Well, I can talk -- I can give you a lot about energy and very little on the political side, because I don’t handle those kind of issues directly. But, I think it’s fair to say that we’re in a transitional period in Turkmenistan; and at least as far as the energy sector is concerned, I think it is far to soon to say what approaches the successor Turkmen government might take on energy.

QUESTION: Okay, so let’s see, so in so far as political changes, the relationship to the energy sector: a complete unknown.

DEPUTY ASSISTANT SECRETARY MANN: Well, in Turkmenistan the state controls the energy sector. So, the decisions the state will make, of course, will be extremely important.

QUESTION: Right. Do you see the possibility that the government will look to an outside country for support, legitimacy? I’m thinking specifically in terms of Russia and Iran?

DEPUTY ASSISTANT SECRETARY MANN: Well, let me get into that by talking about U.S. policy toward the Caspian, and our policy, our energy policy toward Turkmenistan has not changed. It is the same policy that it always has been, which is to support competition, transparency, and development in the Turkmen energy sector for a wide variety of reasons, and are – what we found is, that this is the best way to support the economic development of a country, that this is the best way to bring in world class technology and protect the environment. It’s the best way to maximize the output and maximize the revenue for a country is to have these kinds of features. Other elements of our policy remain the same also. We are firmly opposed to pipelines, to export routes through Iran. So, that part of our policy, of course, is not going to change with regard to Turkmenistan.

QUESTION: Of course. How about to China? -- I mean, obviously pipelines to Iran are a non-option, but are all pipeline equal in terms of export routes and where you would like to see them go?

DEPUTY ASSISTANT SECRETARY MANN: As a general point, we have supported the development of multiple pipelines, and we congratulated the Kazakhs when they developed their Kazakhstan-China oil pipeline, because we think that the development of multiple pipelines is very important in supporting the development of the countries, in supplying global energy markets, and in strengthening the sovereignty and autonomy of the countries of Central Asia.

QUESTION: Definitely, but do you see this period of transition as having the potential for instability and, if that is the case, do you see a possibility of Russia being able to step in and taking a much more active role, not that it doesn’t already have great deal of leverage?

DEPUTY ASSISTANT SECRETARY MANN: Russia has a dominant role in the Turkmen energy sector, and let me stress here, and it’s an important point for me to stress: Our policy is not anti-Russia, it’s anti-monopoly. And what we’ve seen is the power of the Russian monopolies has been used in a way that disadvantages the Caspian energy producers. CPC [Caspian Pipeline Consortium] expansion remains blocked, and the Central Asian producers, on gas, have had no effective options except to export through Gazprom.

QUESTION: Right.

DEPUTY ASSISTANT SECRETARY MANN: Now, in the – it’s also worth a look at the Turkmen upstream, and the Turkmen upstream has been strongly underinvested. So, our sense is the Turkmen energy sector has not gotten anywhere near the level of investment that it needs, because Turkmenistan has not been an attractive – in the past, and I stress in the past, has not been an attractive destination for energy investment.

QUESTION: Have we seen any significant changes since the death of the Turkmenbashi?

DEPUTY ASSISTANT SECRETARY MANN: I think it’s too soon to see any changes; and I think we need to, we all need to understand that a new government, that after the elections -- well, let’s put it this way, after the death of Niyazov, it’s going to take the government, a new government some time to sort itself out. And this is what happens with every country in the world when you have a leadership transition. So, we have to recognize, we have to understand that it’s going to take a new government some time to assess where it is, and decide how it manages the energy sector. And what the – the United States’ position on this, as always, because our policy has been very consistent, our position is that we want to support the development of the Turkmen energy sector. We’re proud of American technology and capabilities, but our companies have to have, well -- our companies do not move in according to government directives. So it has to be a partnership between government and the private sector.

QUESTION: Would you recommend moving in now? Or would you like to see American companies moving in right now?

DEPUTY ASSISTANT SECRETARY MANN: I think, like said, I think we all have to understand that the new government will need to take some time to address the issues, so I think that’s the way I’d approach the question.

QUESTION: Okay, I see, and are you optimistic?

DEPUTY ASSISTANT SECRETARY MANN: It’s funny. I’ve been asked that question so much in the past few years because I was the Nagorno-Karabakh negotiator.

QUESTION: Oh, wow, that must have been a challenge.

DEPUTY ASSISTANT SECRETARY MANN: Professionally, I don’t use the word optimism in my office, but am I optimistic? I think Turkmenistan has powerful opportunities on the full range of development issues that it did not have under the reign of Niyazov, and the U.S. is hopeful of course for the benefit of the Turkmen people that the new government governs in a fashion that takes full advantage of all of these opportunities. So, that’s really -- it’s not an energy answer I’ve given you, it’s an across the board answer I’ve given you.

On energy itself, the short answer is that we have to wait for the government to organize itself. That’s the basic fact. We have to wait for the government to organize itself, and try and understand the ways in which the United States could be helpful.

QUESTION: And did you have any specific ideas about how the United States could be helpful to the development of the energy sector?

DEPUTY ASSISTANT SECRETARY MANN: Well – in the which sector?

QUESTION: In terms of helping Turkmenistan develop its energy sector.

DEPUTY ASSISTANT SECRETARY MANN: I think it’s going to take a lot of study, a lot of scrutiny, first of all to understand what the baseline is, because under Niyazov, no one really knew what the state of the Turkmen energy sector was.

QUESTION: Would you say that anyone has better idea - has there been any opening of the information that you know about in terms of the energy sector or any sector?

DEPUTY ASSISTANT SECRETARY MANN: In a word no, I don’t know anything. Again the time frame is so short. And, Turkmenistan, in the Soviet era, Turkmenistan was producing 90 bcm [billion cubic meters] of gas. It’s roughly half that now, so there has been a great decline in Turkmen production capabilities.

QUESTION: Do you think that’s due to lack of investment?

DEPUTY ASSISTANT SECRETARY MANN: Lack of investment is an important reason for that.

QUESTION: What other reasons do you see?

DEPUTY ASSISTANT SECRETARY MANN: Well, I guess that’s the fundamental one, because when I thought of that, I thought why is there a lack of investment, because Niyazov did not lead an investor friendly government. We had -- you know, I worked the old trans-Caspian pipeline project, and that was a very attractive deal that was offered to Niyazov, and regrettably he declined that one, and would have been a very profitable deal for Turkmenistan.

QUESTION: Are there any plans, does the U.S. have any plans to make any sort of offers or any sort of outreach to Turkmenistan to help it move along, perhaps?

DEPUTY ASSISTANT SECRETARY MANN: We have our Deputy Assistant Secretary for the region was out there a few weeks ago.

QUESTION: Is that Richard Boucher?

DEPUTY ASSISTANT SECRETARY MANN: No, that’s Evan Feigenbaum*, to have discussions at the ministerial level, and we’ve sent some working level experts to look at aid, education, things like this. So that’s where it is thus far.

QUESTION: Okay, one of the things I most wanted to know about is the potential for a shift in the balance of influences in Turkmenistan. Does the U.S. see – I’m not going to say threat – but the possibility of another country getting involved in Turkmenistan’s energy affairs?

DEPUTY ASSISTANT SECRETARY MANN: Gazprom currently dominates the Turkmen energy sector, and we reject the idea of a great game. And, what we’re looking for – it’s the same policy that we’ve had throughout the entire Caspian region of diversity, transparency, responsible development.

I’ll be leaving, actually I’ll be leaving now to go to Kazakhstan, I’ll be doing Kazakhstan, Turkey, Baku, and then IAEA Paris as part of a wider energy trip, but no Turkmenistan on this one.