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IdentifierCreatedClassificationOrigin
06BANDARSERIBEGAWAN452 2006-09-07 08:20:00 CONFIDENTIAL Embassy Bandar Seri Begawan
Cable title:  

CHINA FIRM WINNER IN BRUNEI BLOCK L&M PRODUCTION

Tags:   EPET BX 
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PP RUEHCHI RUEHDT RUEHHM
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ZNY CCCCC ZZH
P 070820Z SEP 06
FM AMEMBASSY BANDAR SERI BEGAWAN
TO RUEHC/SECSTATE WASHDC PRIORITY 3511
INFO RUEHZS/ASSOCIATION OF SOUTHEAST ASIAN NATIONS
RUEHBJ/AMEMBASSY BEIJING 0372
RUEHOT/AMEMBASSY OTTAWA 0117
RUEHLO/AMEMBASSY LONDON 0091
RUCPDOC/DEPARTMENT OF COMMERCE WASHDC
RUEKJCS/SECDEF WASHDC
RHHMUNA/CDR USPACOM HONOLULU HI
					  C O N F I D E N T I A L BANDAR SERI BEGAWAN 000452 

SIPDIS

SIPDIS

DOC FOR 4430/ITA/MAC/AP/0PB/GCREECH
STATE FOR EAP/PMBS
SINGAPORE FOR FCS DANIEL THOMPSON

E.O. 12958: DECL: 09/07/2016
TAGS: EPET BX
SUBJECT: CHINA FIRM WINNER IN BRUNEI BLOCK L&M PRODUCTION
SHARING DEALS

REF: A. 05 BANDAR SERI BEGAWAN 579

B. 05 BANDER SERI BEGAWAN 419

C. BANDAR SERI BEGAWAN 99

Classified By: CDA Justin Friedman, reasons 1.4 (b) & (d)

(U)
1. In August 2005, the Brunei National Petroleum Company
invited bidders for petroleum exploration on the onshore
Seria North Flank Block L and M and the successful bidders
were announced in February, 2006. Block L which covers an
area of 2,253 square kilometers occupies the whole of
Brunei-Muara District and parts of Tutong and Temburong
Districts were awarded to the Loon Energy Inc. and QAF Brunei
Sdn Bhd. Block M which covers an area of 3,011 square
kilometers located in the western part of Brunei covering
most of Belait District but excluding the coastal area
demarcated around BSP,s onshore concession area was awarded
to China Oil USA (Macau) Company Ltd (ChinaOil), Valian
International Petroleum Ltd and Jana Corporation Sdn Bhd.

(U) 2. QAF belongs to HRH Prince Abdul Qawi, the son of the
Brunei Foreign and Trade Minister I, and HRH Prince Mohamed
Bolkiah. Jana Corporation is owned by Pengiran Anak Jaafar,
the brother-in-law of His Majesty Sultan Hassanal Bolkiah.

(U) 3. The signing ceremony for the two onshore concessions
marks an exciting event for Brunei Darussalam. In his
remarks, Energy Minister Pehin Dato Awang noted that these
projects will bring additional employment opportunities for
the Brunei residents.



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COMMENT


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4.(C) China Oil appears to be a winner in this round of
production sharing contracts. Local contacts tell us that
Block M is almost certain to be much more productive than
Block L, which is widely considered to be unpromising, and
that the Canadian-led consortium had originally bid both
blocks but had to settle for only one. The fact that it lost
out on the more potentially profitable Block M to the
China-UK-Brunei consortium probably has less to do with
Brunei's preference in external partners than with internal
royal family politics. As noted above, the Sultan's nephew
Prince Qawi, the son of Foreign Minister Prince Mohamed, owns
QAF, the Canadians' local partner company. Pengiran Jaafar,
the Sultan's brother-in-law by his first wife (and twin
brother of Brunei's Ambassador to Washington) owns the local
company with which the Chinese and Brits partnered. Informed
observers suspect that Jaafar's consortium won the more
desirable contract because the Sultan was concerned about
keeping his first wife's side of the family happy as a step
toward overcoming their resentment at his having taken a
second, much younger wife last year. However accurate that
may be, it's clear that the Chinese chose their local partner
wisely.
FRIEDMAN