Sudan: Special Envoy Gration and CDA Whitehead visit Heglig

UNCLAS SECTION 01 OF 02 KHARTOUM 000869 DEPT FOR SE GRATION, S/USSES, AF A/S CARSON, AF/E NSC FOR MGAVIN DEPT PLS PASS USAID FOR AFR/SUDAN ADDIS ABABA ALSO FOR USAU SENSITIVE SIPDIS E.O. 12958: N/A TAGS: ASEC PGOV PREL KPKO SOCI AU UNSC SU SUBJECT: Sudan: Special Envoy Gration and CDA Whitehead visit Heglig Oilfield ¶1. (U) On July 21 Special Envoy (SE) Gration and Charge (CDA) Whitehead visited Heglig oilfield, the field headquarters of the Greater Nile Petroleum Operating Company (GNPOC). Taking off from the regional capital of Kadugli, SE and his delegation were transported by helicopter over the lush rainy season savannah of South Kordofan to the GNPOC complex at Heglig, where a bevy of GNPOC officials led by Hamad Elneel Abdulgadir, Deputy Secretary General of the Ministry of Energy & Mining, were waiting to welcome the SE. ¶2. (SBU) GNPOC Field Manager Ibrahim Yousif Gamil briefed the visiting delegation on the company's operations in an office complex still decorated with English language safety posters put up by Talisman of Canada, who initially constructed and managed the facility. Now a consortium led by China's CNPC (40%),Malaysia's Petronas (30%) and India's ONGC (25%),GNPOC operates the former Talisman concessions in Blocks 1, 2 and 4 of the Muglad Basin. According to Gamil, GNPOC commenced production in 1999 and has drilled nearly 600 wells across nine oil fields, of which 400 are still in production. Total current output is 180,000 barrels per day of semi-sweet Nile Blend crude, Gamil said, down from a high of 300,000. Gamil said that the blend, which currently markets above 60 dollars a barrel, is of suitable quality out of the ground to run diesel generators without additional refining. He added that GNPOC is seeking to slow the steady decline in production through new exploration, with seismic activity underway in several unexplored areas of the blocks. Absent new finds, major production in the Heglig area will end by 2020. ¶3. (U) SE Gration toured Heglig's Central Processing Facility (CPF), where crude oil is separated from water and sediment. Though the water cut varies from field to field, it presently averages over 80%, according to Heglig CPF technicians. This excess water, which is contaminated with a significant amount of dissolved hydrocarbons, is filtered through a series of holding ponds as part of a natural treatment process. The delegation visited the ponds, the last of which was filled with water grasses and even some fish. GNPOC officials stated that they plan to use the treated water to grow a variety of commercially viable trees, including bamboo and mahogany, for the benefit the local community. The delegation stopped to tour a nursery that provides plants to local inhabitants, but the GNPOC Field Manager admitted that GNPOC's attempts at agricultural outreach had been stymied by nomadic herders, who were "not suited to farming." ¶4. (U) SE Gration next visited the first of six pumping stations along GNPOC's 1,600 kilometer pipeline. According to pipeline technicians, the pipeline has a flow rate of 1,000 cubic meters per hour, and flows 24 hours a day. It feeds approximately 75,000 b/d to domestic refineries in El Obeid and Khartoum, with the remainder exported through terminals in Port Sudan, primarily to East Asian and Indian markets. Technicians explained that the pipelines are maintained through the use of pipeline inspection and cleaning tools ('pigs') of both the normal and intelligent variety. Normal pigging is carried out twice a month for cleaning purposes, while 'smart' pigs are used three times a month to inspect the pipeline. ¶5. (SBU) Eager to show off their community development efforts, GNPOC officials took SE Gration on a tour of the impressive Heglig hospital, which offers completely free medical services to all comers. The hospital contains a general surgery ward, (surgeons rotate in from Khartoum for a two to four-week period as part of their national civil duty--most are professors in medical universities),for trauma cases, as well as routine procedures. It also features an obstetrics and gynecology ward, a maternity clinic, pediatric care, laboratory and pharmacy. GNPOC officials noted that the free care attracts not only local nomadic herders, but patients "from all over the country... people come from as far away as Port Sudan and Darfur." ¶6. (SBU) GNPOC officials said that they also promote community development through hiring local workers. Though it is difficult to find skilled or semi-skilled workers in the area, the company nonetheless hires 140 local Misseriya and Dinka tribesman each per month on 30 day contracts and replaces them with new workers each month so that a maximum number of locals can benefit from GNPOC employment. More broadly, GNPOC has nearly completed its "Sudanization" plan, with most positions filled by Sudanese, with the exception of senior management. This plan appears to have a distinct Northern bias, however. A list of staff rotations observed by CDA in the Heglig office complex contained only 4 Southerners out of 37 names on the list. (Note: At one point other employees pulled KHARTOUM 00000869 002 OF 002 aside members of the SE delegation to complain about austere working conditions and low pay ($500/week). End Note.) ¶7. (SBU) Despite GNPOC's efforts at community development, company officials complained that relations with the local community remain problematic. Nomads continually cut down fencing around the oilfields to let their cattle through to graze, often to the detriment of their livestock, and have otherwise engaged in other minor forms of sabotage. "However, this is economically motivated and not political," stated Gamil. Throughout the visit a contingent of Central Reserve Police accompanied the SE, but the delegation observed no other significant security forces or infrastructure. Asked about the impending announcement of the decision of the Permanent Court of Arbitration on Abyei, GNPOC officials proclaimed steadfast neutrality. "We are not a political entity," said Gamil, "and we try to maintain good relations with all our neighbors." ¶8. (SBU) Comment: The tour of Heglig was not a Potemkin affair, and the GNPOC officials appeared to have little if anything to hide. In line with its falling production, some of the oil facilities at Heglig are showing their age. It appears that there has been only limited investment in upgrades or upkeep since the initial construction, especially in the Central Processing Facility. The lack of advanced technology required to prolong production may point to the end of major petroleum production in Heglig by the end the next decade, barring significant new finds, but in the meantime GNPOC seems to be managing a relatively efficient and ecologically sound operation. The Special Envoy has cleared this cable. WHITEHEAD