Cablegate: Norwegian Oil Advisor in Sudan

VZCZCXRO6091
PP RUEHROV
DE RUEHKH #2174 2531342
ZNR UUUUU ZZH
P 101342Z SEP 06
FM AMEMBASSY KHARTOUM
TO RUEHC/SECSTATE WASHDC PRIORITY 4467
INFO RUCNIAD/IGAD COLLECTIVE

UNCLAS KHARTOUM 002174

SIPDIS

SENSITIVE
SIPDIS

FOR AF/SPG, AF/EPS, EB/IFD and EB/ESC
PLEASE PASS TO USAID FOR AFR

E.O. 12958: N/A
TAGS: EPET EAID PREL SU
SUBJECT: NORWEGIAN OIL ADVISOR IN SUDAN

REF: KHARTOUM 1921

1. (SBU) Summary: Recently arrived Norwegian petroleum consultant
Einar Risa met with Emboff and provided an overview of his work in
Sudan. Risa is interested in coordinating with other donors. He
provided some details of sales of Sudanese oil, mentioned some
technical problems with production from new fields, and confirmed
that shipments of oil from Blocks 3 and 7 began in late August. End
summary.

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Norwegian Sponsored Oil Consultant
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2.(U) Econ Officer met with Mr. Einar Risa, a Norwegian petroleum
consultant, on August 31. Risa has been hired by the Norwegian
government to advise the GNU and GOSS on petroleum matters. Risa
outlined his main objectives as: understanding how the petroleum
sector works, advising on how Norway can become involved, and,
acting as an advisor to help in any way possible. He wants to
coordinate his work with the efforts of other donors, in particular
the U.S.

3. (U) While Risa is new to Sudan, he has experience in advising in
a similar capacity in East Timor. He has also worked as a Norwegian
diplomat and in industry, with the Norwegian oil company Statoil.
Risa said that his initial working assumption is that Sudan could
use advice on policy and legal structure and on exploration. He
suggested that if U.S. sanctions were not a factor, there would be
opportunities for U.S. firms to provide consulting services to
Sudan. His initial impression is that the oil industry executives
and government officials in Khartoum have considerable experience
and are in general competent. Officials in the South have much less
experience.

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Petrodar's Heavy Oil Shipped in August
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4. (SBU) Risa provided some general information on the Sudan's
petroleum sector. He noted that the intention is to export two
grades of oil from Sudan. The production from the Greater Nile
Operating Petroleum Consortium (GNOPC) is sold as Nile blend, which
has fetched an average price $62 per barrel in the past month. The
production from the Petrodar consortium, which is just coming
on-stream now, will be sold as Dar blend, and will probably sell at
$10 discount to the benchmark price. Risa stated that the first
shipment of Petrodar's production was shipped in late August. The
initial shipment was heavier than the planned Dar blend. He noted
some of the technical problems involved handling the output, due to
the very heavy character of the Petrodar production. The oil
currently being produced is so viscous it requires heating or mixing
with a solvent to be pumped through the pipeline. Risa said that as
production from other fields in Blocks 3 and 7 comes into production
it will be blended to create the Dar blend.

5. (SBU) Commenting on the figures provided by the government on oil
revenues (reftel), Risa said that his initial review of the figures
leads him to believe the figures for administrative costs and
transportation are high. He had looked at the transportation costs
and found that the attribution of costs for pipeline was done on a
basis that was typical in the industry, but the figures were on the
high side. Risa said that sales of Sudan's production are currently
done by the Ministry of Energy and Mining, with sales conducted by
bidding for lots. In Risa's opinion, while this is not a bad
system, it may not maximize revenue. Risa said that his preference
would be for the separation of policy and operations, thus he would
suggest that the sales be handled by the state oil company, while
the Ministry of Energy and Mining restricts itself to policy.

6. (U) When asked what the U.S. Government could do to assist in the
petroleum sector, Risa suggested that USAID could help by offering
training in the U.S. for personnel in the petroleum sector.

HUME

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