AFGHANISTAN: NEW OIL AND GAS FIELD TENDER EXPECTED IN THREE

UNCLAS KABUL 003788 SIPDIS DEPT FOR SCA/FO, SCA/RA, AND SCA/A (A/S BOUCHER, GASTRIGHT,DEUTSCH) DEPT PASS AID/ANE, OPIC DEPT PASS USTR FOR GERBER AND KLEIN DEPT PASS OPIC FORZAHNISER DEPT PASS TDA FOR STEIN AND GREENIP CENTCOM FOR CG CFC-A, CG CJTF-76, POLAD, JICENT NSC FOR JWOOD TREASURY FOR ABAUKOL, BDAHL, AND MNUGENT MANILA PLEASE PASS ADB/USED PARIS FOR OECD/ENERGY ATTACHE OSD FOR SHIVERS, SHINN COMMERCE FOR DEES, CHOPPIN, AND FONOVICH TOKYO ALSO FOR AID COUNSELOR AANENSON SENSITIVE SIPDIS E.O. 12958 N/A TAGS: ENRG EPET KPWR EAID PGOV AF SUBJECT: AFGHANISTAN: NEW OIL AND GAS FIELD TENDER EXPECTED IN THREE MONTHS Sensitive but Unclassified ¶1. (SBU) The Afghan Ministry of Mines intends to issue a tender for exploration of several blocks of the Amudarya Oil and Gas basin in north-western Afghanistan in February or March 2008 Post learned at the recent Oil and Gas Working Group meeting November 8. Note: The Amudarya basin is also where the fields for the proposed Sheberghan gas powered plant are located. However, the Sheberghan fields are not part of this tender. End Note. According to Norwegian Agency for Development and Cooperation (NORAD) consultants, the exploration and eventual resource extraction will occur under the rubric of Production Sharing Agreements (PSA)'s negotiated with the IRoA, paving the way for private sector investment in Afghanistan's natural resources sector. ¶2. (SBU) Norway and the World Bank have also been working with the Ministry of Mines to draft a Hydrocarbons Law and accompanying regulations to ensure "rules of the game" are in place for the sector as soon as possible. After a rewrite, the law is currently under review and it and its accompanying regulations, are expected to be ratified in the near future. It remains unclear however if the ratification will occur prior to March 2008. Lack of ratification will not delay issuance of the tender, but may impact contract negotiation and/or exploration timelines. ¶3. (SBU) According to NORAD and WB reps who recently met with him, Minister of Mines Adel is also eager to include oil exploration in the northeastern Afghan-Tajik basin in the proposed tender. He appears to be motivated by recent press reports claiming Tajikistan has retained the services of Tethys Petroleum to explore its half of the basin. NORAD consultants tell us it is unlikely the tender will be expanded and cite two reasons. First, NORAD, not the Ministry has the authority to decide if the tender's scope can or will be expanded. Second, NORAD believes that there is insufficient time to analyze and properly package the available Afghan-Tajik basin data in time for a March 2008 tender announcement. Post will continue to report developments as they occur. Note: Post's Oil and Gas Working Group meets approximately every six weeks and is attended by representatives of the Ministry of Mines, World Bank, Norwegian Embassy and its development arm NORAD, as well as ECON, USAID and the U.S. Embassy's Afghanistan Reconstruction Group (ARG). End Note. Wood