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. -------------- A Long Awaited Meeting -------------- ¶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. -------------- - 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. -------------- 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 BAGHDAD 00002752 002 OF 002 date training. -------------- Khader Tags Oil Ministry Unresponsive -------------- ¶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. -------------- Comment -------------- ¶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. CROCKER