PRC/SUDAN: CHINESE OIL COMPANY VP DISCUSSES SUDAN

C O N F I D E N T I A L BEIJING 001435

SIPDIS

E.O. 12958: DECL: 06/01/2019
TAGS: PREL PGOV EAID ENRG EPET SOCI KDEM CH SU
SUBJECT: PRC/SUDAN: CHINESE OIL COMPANY VP DISCUSSES SUDAN
WITH SE GRATION

Classified By: Political Minister Counselor Aubrey Carlson. Reasons 1.
4 (b/d).


1. (C) SUMMARY. In a rare and free-flowing discussion with
visiting Special Envoy for Sudan General Scott Gration, the
state-owned China National Petroleum Corporation (CNPC)
reported a "wait-and-see" attitude about Sudan's future but
hoped to continue oil production regardless of the 2011
referendum results, according to CNPC Vice President Wang
Dongjin. Wang said that CNPC's significant involvement in
Sudan's oil sector dated back to 1995 and that exploration in
Southern Sudan was on-going. The company had donated more
than $50 million to Sudan's social and economic development
in the form of infrastructure and training. SE Gration
stressed our common interest in peace and security in Sudan
and suggested possible U.S.-China collaboration on
infrastructure projects. End Summary.

CNPC's "Wait-and-See" Attitude about Sudan's Future
-------------- --------------


2. (C) Given the "serious security situation" in Sudan, CNPC
had asked the Sudanese Government to guarantee the security
of CNPC oil workers. Queried about the 2010 elections and
2011 referendum, Wang said the company was following events
closely and had adopted a "wait-and-see" attitude. He
declined to speculate on post-referendum scenarios,
commenting that CNPC hoped to continue oil production in
North-South border regions regardless of the results of the
referendum or the internationally-arbitrated determination of
Abyei's borders. Noting the need for a new pipeline and
refinery in Southern Sudan, Wang expressed hope that a new
pipeline would be completed within two years and a new
refinery within three years.

CNPC's Involvement in Sudan's Oil Sector
--------------


3. (SBU) According to Wang, CNPC had been present in Sudan
since 1995 and was now operating in Blocks 1, 2, 3, 4, and 7.
In addition, the company was carrying out exploration in
Blocks 13 and 15 and had a 50 percent holding in the Khartoum
Refinery. In 2008, CNPC produced an average of 500,000
barrels a day of crude oil in Sudan. Asked about prospects
for finding more oil in Southern Sudan, Wang commented only
that exploration in the southern oil blocks was on-going.

CNPC's Contributions to Sudan's Development
--------------


4. (SBU) Wang said CNPC had donated more than $50 million to
Sudan's social and economic development in the form of
infrastructure and training. In addition to the construction
of roads and bridges, the company had set up 10 hospitals,
built 25 schools, donated educational materials to more than
200 schools, drilled 200 water wells, trained more than 1000
Sudanese professionals and provided scholarships for 30-50
students annually to attend China Petroleum University.

SE Generation Urges U.S.-China Collaboration
--------------


5. (C) General Gration said that the United States and China
shared a common interest in peace and security in Sudan. He
said China's oil investments and workers in Sudan could be at
risk if the North-South border issue was not resolved,
stressing the need to continue pumping oil to generate
much-needed revenue for Sudan in general and the Government
of Southern Sudan (GOSS) in particular. Gration suggested
that the United States and China should coordinate on
infrastructure projects in Sudan, listing as possible
projects the dredging of the Nile, construction of a railway
to Juba and improvement of air fields in the South. He
expressed interest in visiting CNPC's oil production field
in/around Abyei and seeing the oil pipelines operated by
CNPC. Wang responded that Gration would be welcome to visit
the CNPC office in Khartoum and that a tour of oil facilities
and pipelines could be arranged so long as the Sudanese
Government agreed.
PICCUTA