Cablegate: Cpa: Petroleum Commission Still Stalled

DE RUEHKH #1807 2081254
R 271254Z JUL 06




E.O. 12958: N/A
SUBJECT: CPA: Petroleum Commission Still Stalled

1. The wealth sharing working group of the Assessment and
Evaluation Commission (AEC), chaired by the United States, met on
July 17 to discuss the National Petroleum Commission, the Fiscal and
Financial Allocation and Monitoring Commission (FFAMC), the
conversion to a new national currency, and other issues related to
the wealth sharing provisions of the CPA. There was no progress to
report on the FFAMC and the currency, but the working group decided
to invite representatives of the FFAMC and the Central Bank,
responsible for the currency conversion, to address future

2. The Petroleum Commission was also not functioning due to a
disagreement on its mandate and how early it gets involved in the
exploration and production contracting process. The Sudanese
People's Liberation Movement (SPLM) believes that the Petroleum
Commission should control the entire petroleum contracting process
from bidding and negotiation onward with its own secretariat. The
National Congress Party (NCP) believes the commission's role should
be advisory in the early stages, with the Ministry of Energy and
Mining running the contracting process. The commission would then
ratify the completed contracts.

3. The National Congress Party representative said that they were
close to a compromise where the Ministry of Energy and Mining
maintains control over the process, but the Government of Southern
Sudan's (GoSS) Ministry of Industry and Mining takes some form of an
active role throughout. The SPLM representative disagreed with this
approach, and said that the only way to protect the interests of the
people and make sure that environmental concerns were addressed from
the beginning, was for the Petroleum Commission to run the entire
contracting process from the beginning. The discussions became more
heated and the two sides remained far apart. The Norwegian
representative expressed concern that there had been no capacity
building for the SPLM and its commission representatives, which
would be necessary if the commission were to take any sort of role
in this highly technical field. In response to a question from the
United States, the National Congress Party representative explained
that all new petroleum contracts were stalled until the Petroleum
Commission was functioning.


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