VZCZCXRO0476
RR RUEHBC RUEHDBU RUEHDE RUEHKUK RUEHLH RUEHMOS RUEHPA RUEHPW
DE RUEHNK #0606 1390920
ZNY CCCCC ZZH
R 190920Z MAY 06
FM AMEMBASSY NOUAKCHOTT
TO RUEHC/SECSTATE WASHDC 5507
INFO RUEHZK/ECOWAS COLLECTIVE
RUCNISL/ISLAMIC COLLECTIVE
RUEHBY/AMEMBASSY CANBERRA 0313
RUEHDO/AMEMBASSY DOHA 0086
RUEHDE/AMCONSUL DUBAI 0009
RUEHBAD/AMCONSUL PERTH 0277
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEAIIA/CIA WASHDC
RUEKDIA/DIA WASHDC
RUEHNO/USMISSION USNATO 0221

C O N F I D E N T I A L NOUAKCHOTT 000606 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR AF/W; AF/EPS (A. ADLER, J. HAENI) 
EB/ESC/IEC (K. RIOS) 
EB/CBA (D. WINSTEAD) 
4510/IEP/ANESA/OA/PMICHELINI 
6930/ITA/MAS/MFG/OEEI/ABRICKMAN 
DAKAR FOR RSCO CGRIFFIN 
 
E.O. 12958: DECL: 05/18/2016 
TAGS: BBSR EINV EPET ECON EFIN MR
SUBJECT: MAURITANIAN OIL PRODUCTION FALLS DUE TO POSSIBLE 
TECHNICAL PROBLEMS 
 
Classified By: Amb. Joseph LeBaron, Reason 1.4 (b),(d) 
 
-------------- 
(U) Key Points 
-------------- 
 
-- Production at the Chinguetti Project fell last week, due 
to technical problems.  Project partners are taking this 
problem very seriously, but the Mauritanian Ministry of Oil 
and Energy Officials believe it can be easily resolved. 
 
------------ 
(C) Comments 
------------ 
 
-- Woodside's Country Manager John Ozturgut has warned all 
along that the 75,000 barrel a day estimate was the highest 
estimated production rate and should not be considered a 
constant rate of production.  Now investors are taking note. 
 
-- If the Woodside-led consortium does not find an immediate 
solution, oil production will continue to remain low in the 
coming weeks or months.  The world oil price, despite its 
slight decline this week, continues to be in favor of 
Chinguetti's oil revenue forecast.  Mauritanian oil and 
energy authorities are not disappointed with the current 
production. 
 
End Key Points and Comment. 
 
¶1.  (U) The Mauritanian oil production in the Chinguetti 
Field suddenly fell last week and this trend is likely to 
continue in the coming weeks.  After a boom in March and 
April, production dropped during the first week of May from 
70,000 barrels a day to 45,000 barrels.  This decline is 
attributed to the high percentage of gas in the oil. 
 
¶2.  (C) According to Woodside's Corporate Affairs Manager 
Brendan Augustin, the low level of production could be 
attributed to reservoir performance.  He claims "the reserves 
are fine but the actual well may not be a best performer." 
He explained that there could be a variety of problems 
ranging from a well head malfunction or an inefficient well. 
Augustin said that this was common during the life of a 
project but Woodside did not expect the decrease to occur so 
soon, but was anticipating this to occur next December or 
January. 
 
¶3.  (U) Government sources hold out the hope that the 
decrease is the result of a gas compressor that failed last 
week, creating a malfunction in the gas and oil separation 
process. When this failure occurred, producers decided to 
reduce the production volume to its minimum level in order to 
avoid more losses from the production well, but that the 
problem can be resolved. 
 
¶4. (C) Augustin states they are still analyzing this problem 
and expect to find a solution in the upcoming weeks. 
However, the situation may last several weeks or months, 
especially if a new well needs to be drilled.  Experts are 
currently working on the site to determine the exact cause. 
 
¶5. (U) The decrease of Chinguetti's production had a negative 
effect on Woodside's and its partner's shares in the stock 
market.  Production from Chinquetti is not expected to 
increase significantly before the end of the third quarter of 
¶2006. 
LeBaron