PRC/IRAN: CNOOC-IRAN COOPERATION IN PRELIMINARY

C O N F I D E N T I A L BEIJING 004569 SENSITIVE SIPDIS STATE FOR EAP/CM, NEA/IR, EEB/ESC, INR/EAP, INR/NEA E.O. 12958: DECL: 12/17/2033 TAGS: ECON ENRG EPET EINV PREL PARM PTER MNUC POL IR, CH SUBJECT: PRC/IRAN: CNOOC-IRAN COOPERATION IN PRELIMINARY STAGE, COMMERCIALLY DRIVEN REF: STATE 125576 Classified By: Economic Minister Counselor Robert Luke for reasons 1.4 b/d. Summary -------------- ¶1. (C) In a discussion with Economic Minister-Counselor, CNOOC's External Affairs Section Director Lu Xiaofeng emphasized that CNOOC's cooperation with Iran is driven by commercial interests and stressed that CNOOC has no intention of becoming entwined in political issues. He reiterated that CNOOC complies with international and Chinese laws as well as UN Security Council resolutions on Iran. Lu claimed that CNOOC's cooperation with Iran is still in a preliminary stage and pointed out that CNOOC has not yet made any substantial investments in Iran. CNOOC is currently conducting an internal evaluation to analyze potential risks of cooperation with Iran, he reported. End Summary. CNOOC activities in Iran driven by commercial interests -------------- -------------- ¶2. (C) Economic Minister-Counselor delivered points in reftel to China National Offshore Oil Corporation (CNOOC) External Affairs Unit Director Lu Xiaofeng on December 16. Lu assured us that he will convey the points to CNOOC's senior management. He stressed that CNOOC will continue to comply fully with Chinese and international laws, Chinese foreign policy, and UN Security Council resolutions on Iran, but noted that "different entities have different interpretations of the same issue." Lu explained that CNOOC's cooperation with Iran has been based solely on commercial interests and emphasized that CNOOC has no intention of becoming entwined in political issues. In Lu's view, energy sector cooperation with Iran is a normal part of CNOOC's business activities. He asserted that "CNOOC is interested in any potentially profitable project around the world." Econ Minister-Counselor countered that adopting a business-as-usual approach to investing in Iran's energy sector would expose CNOOC to serious reputational and commercial risks, and would certainly involve them in political issues. Risks of cooperation with Iran undergoing internal review -------------- -------------- ¶3. (C) Lu claimed that CNOOC's cooperation with Iran is still in a preliminary stage and pointed out that CNOOC has not yet made any substantial investments in Iran. CNOOC is currently conducting an internal evaluation to analyze potential risks of conducting cooperation with Iran, he reported. (Note: Dow Jones reported in mid-November, citing Iranian sources, that the National Iranian Oil Corporation (NIOC) and CNOOC had finalized a development plan for Iran's North Pars gas field, but neither side has confirmed whether the development plan has been signed. CNOOC and NIOC have been engaged in negotiations on North Pars gas field development and the construction of an LNG plant since 2006. End Note). Randt