PRT TIKRIT: CHAIRMAN OF OIL MINISTRY IRAQ-CHINA

C O N F I D E N T I A L SECTION 01 OF 02 BAGHDAD 002752

SIPDIS

SIPDIS

E.O. 12958: DECL: 08/19/2017
TAGS: ECON ENGR EPET KCOR EIND IZ CH
SUBJECT: PRT TIKRIT: CHAIRMAN OF OIL MINISTRY IRAQ-CHINA
COMMITTEE VOICES DISSATISFACTION WITH CHINESE TACTICS

Classified By: PRT Team Leader Steven Buckler for reasons 1.4 (b) and (
d)


1. (U) This is a PRT Tikrit, Salah ad Din cable.


2. (C) SUMMARY. During an August 6 meeting in Bayji, Abdel
Khader Sabah, the chairman of the Iraq-China Committee for
the Ministry of Oil (MoO),claimed that the China National
Petroleum Company (CNPC) is reneging on agreements made in
earlier conferences with respect to training and development
programs for Iraqi engineers. Khader, the North Refinery
Director (and former Director General of Production),
described the CNPC as "always hungry" and stated that the oil
conglomerate was aggressively lobbying the MoO for permission
to conduct extensive research at the Jawan field - without
Iraqi participation. A confidential memorandum addressed to
the Chairman of the Supervisory Committee of the MoO from the
Iraq-China Committee provided by Khader to IPAO implores the
Ministry to take a stronger stance vis-a-vis the CNPC through
formal diplomatic channels. Khader said that this was
unlikely to happen due to payoffs being made by the CNPC to
Shahristani and other decision makers in the MoO. END
SUMMARY.

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A Long Awaited Meeting
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3. (C) Khader serves along with two other members as the
Chairman of the Iraq-China Committee, the principal vehicle
for coordination of technical issues between the Ministry of
Oil and the Chinese National Petroleum Company. On July
22-26 the Committee held a series of meetings ) coupled with
a visit to the Chinese Geophysical Institute - with their
Chinese counterparts in Beijing. The session was the fourth
in a sequence dating from November 8, 2005, and the first
since November 2006. Khader claimed that the Chinese had a
history of canceling meetings, i.e. the July conference was
originally scheduled for February.

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Chinese Interest Strong in Jawan, Faqaa, Imara
-------------- -


4. (C) Khader depicted Chinese interest in the Jawan fields
(a prospective field in Nineveh province described as "close
to producing" by industry sources) as extremely strong.
Although the Iraqi delegation arrived in Beijing expecting to
discuss training and development opportunities, the CNPC
devoted most of the four day session to negotiating
logistical support for expanded geological study of the Jawan
area by a Chinese-only team. According to Khader, the CNPC
officials told the Iraqi attendees that Iraqi technical
participation in the study was not necessary; instead they
would be sent a report upon completion of the study. Khader
attributed the exclusion to a Chinese desire to protect
sensitive information.


5. (C) The memorandum mentions Chinese interest in sending
technicians to study the Faqaa and Imara fields (located to
the south of Baghdad). Study of the horizontal field in As
Siniyah (located near Bayji) is noted as a future objective
of the CNPC.

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No Quid Pro Quo
--------------


6. (C) The Chinese initially made a robust offer to train and
develop Iraqi engineers and technicians via studies of
potential Iraqi oil fields. However, such assistance did not
materialize. The marked change in the Chinese approach is
noted in the report as occurring after the "securing" of the
Ahdab field, a potentially lucrative field located in Wasit
province labeled by industry sources as a long-term prospect.
According to Khader, this field was promised to the CNPC for
future development by Shahristani in 2006 after the
hydrocarbon law passage in exchange for "payments", a subject
about which he declined to elaborate further upon. (NOTE:
This is the only allegation of possible Chinese payments for
future oil contracts we have heard in Salah ad Din. The PRT
will continue to investigate this issue and report any/all
findings which may corroborate or contradict its veracity.
END NOTE.)


7. (C) The CNPC provided the Iraqi delegates with a tour of
their Geophysical Institute (located about 100 kilometers
from Beijing according to the report),the facility where
Iraqi engineers will eventually be trained. Khader
highlighted the tour as an example of Chinese intransigence:
the Iraqi trainees will only be taught outmoded techniques on
antiquated equipment while CNPC engineers receive more up to

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date training.

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Khader Tags Oil Ministry Unresponsive
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8. (C) Khader doubted that the Ministry of Oil in Baghdad
would take real action to "act in the interests of the Iraqi
people", despite strong recommendations by the report which
call for diplomatic protests (both via notes and meetings) to
the Chinese Ministry of Foreign Affairs and the CNPC. Khader
added that this action was unlikely because the Minister of
Oil and his important subordinates are handsomely rewarded
for their cooperation with the CNPC.


9. (C) Apart from the report, Khader claimed that the
Ministry was not encouraging development of oil fields in
Salah ad Din because of sectarian bias. Khader drew
attention to the lack of sufficient investment in the Bayji
oil refinery as an example of Baghdad's neglect.

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Comment
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10. (C) Abdel Khader tends to embellish tales of woe,
particularly in respect to sectarian issues. However, Khader
may offer a valuable window into the nature of the
Iraqi-China relationship, especially concerning potential
newfound opportunities to China promised by the hydrocarbon
law. Continued development of this relationship will remain
a high priority of the PRT. END COMMENT.


11. (U) For additional reporting from PRT Tikrit, Salah ad
Din, please see our SIPRNET reporting blog:
http://www.intelink.sgov.gov/wiki/Tikrit.

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