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. -------------- Scope of Work -------------- ¶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. -------------- An Overview of the Sector -------------- ¶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. -------------- A Place for Other Experts -------------- ¶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 KHARTOUM 00001610 002 OF 002 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