MEETING WITH NORWEGIAN PETROLEUM ADVISOR

C O N F I D E N T I A L SECTION 01 OF 02 KHARTOUM 001610

SIPDIS

SIPDIS

E.O. 12958: DECL: 07/08/2016
TAGS: EPET PGOV EFIN PREL EAID SU
SUBJECT: MEETING WITH NORWEGIAN PETROLEUM ADVISOR

Classified By: CGJ R. Whitehead, Reason: Section 1.4 (b) and (d)


1. (C) Summary: On June 30, CG met with Einar Risa, a
petroleum advisor supplied to Sudan and the Government of
Southern Sudan (GoSS) by the Norwegian Government. Risa
described his scope of work and commented on prices,
production and transport costs of Sudanese petroleum, as well
as the challenges he may face in dealing with Khartoum and
various petroleum operators. He described areas in which
the advisory initiative could use technical support from
others, which would not be duplicative. End summary.

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Scope of Work
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2. (C) Risa said that he worked for Petrad,s International
Program for Petroleum Management and Administration. Most
recently, he has involved with the East Timor government oil
and gas exploration authority as the official advisor to the
former President of East Timor. Risa said that he might or
might not continue in that capacity part time, but had also
accepted a five-month contract in Sudan; initially, he
expected to spend about two weeks per month on the ground,
primarily in the North. Risa said that the longer term
Norwegian plan was to put a full-time advisor in Khartoum and
a second in Juba, working with the GoSS Ministry of Finance.
To date, the Norwegians had been unable to find suitable
candidates interested in the jobs, but it was conceivable
that he would eventually fill one of these slots.


3. (C) Risa said the confidence and capacity building went
hand in hand in the South. It was essential to develop
greater Southern expertise on technical petroleum issues in
order for the South to understand what to look for as it
develops a functioning petroleum sector, including new
exploration and production initiatives. Norway has already
taken a group of key individuals from the GoSS and the
Government of National Unity (GNU) to a seminar on key
technical issues in Oslo. Upon the group,s return, the
North had &helpfully8 provided all the returnees with
access to operational oilfields and production sites in both
Northern and Southern Sudan.

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An Overview of the Sector
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4. (C) Risa said that the bulk of his work will initially
take place in Khartoum; none of the records he needs to
examine are in Juba. He said that after less than three
months of visiting Sudan, he still could not say what level
of cooperation he could expect to receive from the GNU in
terms of access to petroleum contracts, marketing strategies,
and price structures. Without access to the contracts, he
observed, it would be impossible to know exactly how the
sector worked and if the South was in fact receiving its fair
share of revenues. Risa said that initial indications showed
that prices were not unreasonable, although transport costs
seemed high. He had not yet seen the data on recovery rates,
but it was obvious that GNU production estimates had been
overly optimistic.


5. (C) Risa commented briefly on various petroleum firms
operating in Sudan. He admitted that he did not know how
much cooperation he would get from either Chinese or Indian
firms, but said that the Malaysian firm Petronas was, in his
view, the best petroleum operator in Asia. Risa said that he
had examined the White Nile Limited (WNL) operation in some
detail, and learned that kickbacks were involved. He added
that there was a wide variety of joint venture contracts
worldwide, with the percentage split of proceeds covering a
wide range, depending upon the risk and capital outlay
involved. The WNL contract is at the generous end of this
spectrum in favor of the operating partner.

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A Place for Other Experts
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6. (C) CG queried Risa on what assistance he felt other
parties could provide once Norway had fielded both of its
petroleum advisors. Risa responded that there are numerous
areas in which he would probably need additional expertise.
He said that metering was one. Metering was a relatively
straightforward issue, but it required on the ground
verification to make sure that gauges were calibrated
properly and that a separate stream was not introduced into
an already metered flow. He thought that additional legal,
financial, and technical expertise would also be needed at
various stages. Risa thought that a completely separate

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petroleum advisory initiative in the South could conceivably
be duplicative. He expressed willingness to speak to those
interested in pooling efforts in the petroleum sector.
(Note: We have provided contact details to Embassy Khartoum
and the Sudan Program Group. End note.)
HUME