PETROBRAS EXEC SAYS NIGERIA PRODUCING BELOW ITS

C O N F I D E N T I A L SECTION 01 OF 02 LAGOS 000072 SIPDIS DOE FOR GPERSON, CHAYLOCK, CGAY TREASURY FOR PETERS, HALL E.O. 12958: DECL: 02/12/2019 TAGS: EPET ENRG ECON EINV PREL BR NI SUBJECT: PETROBRAS EXEC SAYS NIGERIA PRODUCING BELOW ITS OPEC TARGET LAGOS 00000072 001.5 OF 002 ZFR ****************ZFR*************************Z FR PLASE CANCEL THIS MRN CABLE WILL BE RESENT UNDER NEW MRN LAGOS 00000072 002 OF 002 said it was partly related to oil prices, but was also part of a broader strategic plan by Petrobras to focus it resources on oil fields offshore Brazil. ¶5. (C) Ferreira noted that while Petrobras may be interested in further Nigerian deep offshore developments, it has no plans to move onshore. When asked about the Nigeria-Sao Tome Joint Development Zone (JDZ),he said Petrobras (and other major oil companies) did not see commercially attractive prospects in the area and his company has no plans to explore in those waters. However, Ferreira related that every year the Sao Tome and Principe President makes a plea to Brazilian President Luiz Inacio da Silva asking him to push Petrobras to invest in the JDZ, these requests usually coming on the margins of meetings between the heads of state of Portuguese speaking countries. According to Ferreira, immediately afterwards President da Silva contacts the head of Petrobras to ask why the company is not doing more in Sao Tome and every year the head of Petrobras has to remind da Silva that there is not a commercially significant amount of oil in the JDZ. That explanation, Ferreira said, usually ends the conversation, at least until the next time the two presidents meet. Petrobras on Chinese and Russian Activity in Nigeria -------------- -------------- ¶6. (C) Ferreira did not see Chinese oil companies as playing a significant role in Nigerian offshore oil field development now or in the near future. However, he did see Chinese as an active threat in oil field service industry. A Petrobras subsidiary recently lost a bid to perform seismic survey work in Nigeria to a Chinese company. The Chinese were able to significantly underbid the Brazilians by, Ferreira thought, bringing cheap Chinese labor to Nigeria and ignoring Nigerian local content directives. Ferreira said Russian companies appear particularly interested in the Nigerian natural gas sector, but like other oil company contacts who have mentioned Russian activity, he was unable to point to any specific projects or deals to back up his claim. Ethanol Export Plan Dead; No Help on Refineries -------------- -- ¶7. (C) A 2005 agreement between the GON and Petrobras to import ethanol into Nigeria from Brazil has failed. After lengthy delays in starting the project, Petrobras had begun loading its first tanker of ethanol in Brazil for export to Nigeria when the Nigerians abruptly ordered the shipment called off. According to Ferreira, the Nigerian National Petroleum Corporation (NNPC) finally realized it had no facilities for storing ethanol, no method for mixing it with gasoline, and no plan to distribute pure ethanol or blended gasoline throughout the country. Ferreira does not expect the ethanol export plan to be revived. In an aside, he noted that NNPC has repeatedly inquired about the possibility of Petrobras building petroleum refineries in Nigeria. Ferreira said his company has absolutely no interest in doing so. ¶8. (U) This cable cleared by Embassy Abuja. BLAIR