NIGERIA: EXXONMOBIL DISCUSSES YAR'ADUA'S HEALTH

C O N F I D E N T I A L SECTION 01 OF 02 ABUJA 002322

SIPDIS

DOE FOR CHAYLOCK AND GPERSON

E.O. 12958: DECL: 11/25/2018
TAGS: ENRG EPET ECON PREL NI
SUBJECT: NIGERIA: EXXONMOBIL DISCUSSES YAR'ADUA'S HEALTH
AND BUSINESS ENVIRONMENT

REF: A. ABUJA 2269

B. ABUJA 2146

Classified By: Acting Economic Counselor Anthony Fernandes for reasons
1.4 (b & d)


1. (C) SUMMARY: On November 17, 2008 ExxonMobil (EM) senior
officials reported to the Ambassador that President Yar'Adua
appeared frail and thinner than usual in their meeting with
him that day. EM officials also expressed disappointment in
the lack of progress in the current administration and cited
the recent cabinet reshuffle as paralyzing all work with the
ministries (reftel B). EM officials said not a lot of
positive steps taken on resolving GON issues with oil majors
thus far in President Yar'Adua's tenure. EM hoped that USG
assistance could help with capacity building efforts within
the Nigerian government (GON) especially to improve the
policy environment in the oil sector, help with payment
arrears, and training for the GON military in protecting the
Bonney Channel. According to EM, they believe that the
rumors that the President's President's Advisor on Energy
Rilwanu Lukman will be the next energy minister. END SUMMARY

PRESIDENT YAR'ADUA'S HEALTH
--------------


2. (C) On November 17 the Ambassador met with Rick Kruger,
President of the ExxonMobil Production Company President,
John Chaplin, outgoing Exxon Mobil Nigeria Managing Director
(MD),Mark Ward, incoming ExxonMobil Nigeria MD, and John
Fry, Africa Vice President for the Exxon Mobile Production
Company. EM officials reported that they had a meeting with
President Yar'Adua earlier in the day and the President's
Advisor on Energy Rilwanu Lukman attended. Chaplin said the
President appeared thinner and more frail since the last time
they saw him. In addition, the meeting was more formal than
in the past, with more GON participants than previously.

MORE OF THE SAME
--------------


3. (C) Chaplin said that the oil industry's problems continue
unabated and reported that Shell and Chevron had security
incidents over the November 15-16 weekend. The Ambassador
asked their thoughts on the new patrol boats Nigeria obtained
to further secure Bonney Channel and Chaplin replied that
"they look good, but they have a high concern as to whether
Nigeria has the capacity to provide proper maintenance of the
boats, a problem experienced with the older boats." Chaplin
underscored that the boats must be in top shape and perform
well under threat conditions if they are to serve as a
deterrent. Chaplin said any help the USG could provide to
the GON for river training would be "very good." The
Ambassador explained that the USG has offered training to the
GON, but offers, to date, have not been accepted.


4. (C) Chaplin queried the Ambassador on her thoughts and
experience with the Niger Delta Development Commission
(NDDC). The Ambassador responded that the NDDC's report card
was not outstanding, and she has not seen the projects in
place that should be there on development, health and
education. She mentioned a lot of money from the IOC's and
the GON flow to the NDDC without clear transparency in
accomplishments. (NOTE: The NDDC operates under the mandate
of improving social and environmental conditions in the
South-South or oil producing region. END NOTE).

CABINET DISARRAY - CAUTION AHEAD
--------------


5. (C) Chaplin opined that the complications from the recent
sacking of 20 ministers has "left a hole in the government"
further exacerbated by the pending supreme court's decision
on the 2007 presidential election. The Ambassador concurred
and noted that there is wide speculation on scenarios
discussed around town that the new ministers will not be
named until after the supreme court decision. Chaplin
brought up the issue of problems with the sanctity of
contracts and the Ambassador outlined the advocacy process
and encouraged EM to engage.

GON COMPETENCY A PROBLEM
--------------


6. (C) Kruger and Chaplin shared that the oil companies
typically have a seasaw type look to their earnings and
margins and as long as they level out in a positive manner
all is well. Currently, the risk is beginning to be bigger

ABUJA 00002322 002 OF 002


than the reward and EM's frustration with the business
environment in Nigeria continues. Chaplin said that there is
a lack of competency among the staff in the ministries and
the ministers and their limited staff do not understand most
issues. The Ambassador agreed that capacity building was an
element that the U.S. Mission is working on as well as
others. She said that the ministers don't have the staff to
develop briefs, leaving a void. Chaplin said "at the end of
the day, business can't get what they need and what they
want." Fry requested that any capacity building support the
USG could contribute to the GON would be welcomed.


7. (C) Chaplin noted that the competency issue has created
confusion at the President's level, particularly considering
the pending reorganization of the Ministry of Energy and
Nigerian National Petroleum Corporation (NNPC). EM officials
commented that if Rilwanu Lukman becomes the next Minister of
Energy the situation could improve because he has experience,
history in the oil and gas sectors, and would likely be able
to build a more competent staff. (NOTE: Lukman is an ex-oil
minister, minister of foreign affairs, and served as
secretary general of the Organization of Petroleum Exporting
Countries (OPEC). Retel A provides further background
information. END NOTE.)


8. (C) COMMENT: EM, like other U.S. companies in Nigeria,
expressed a common theme of frustration with the GON's lack
of forward movement as well as arrears in oil payment on
joint ventures. This issue is one the U.S. Mission pushes
regularly, including the sancity of contracts, and
transparency in business transactions. END COMMENT.


9. (U) This cable was coordinated with Consulate Lagos.

Sanders