VZCZCXYZ0000
RR RUEHWEB

DE RUEHNY #1350/01 3061258
ZNR UUUUU ZZH
R 021258Z NOV 06
FM AMEMBASSY OSLO
TO RUEHC/SECSTATE WASHDC 4822
INFO RUEHSM/AMEMBASSY STOCKHOLM 2956
RUEHHE/AMEMBASSY HELSINKI 7845
RUEHRK/AMEMBASSY REYKJAVIK 0742
RUEHCP/AMEMBASSY COPENHAGEN 2159
RUEHMO/AMEMBASSY MOSCOW 3918
RUEHMU/AMEMBASSY MANAGUA 0054
RUEHGB/AMEMBASSY BAGHDAD 0079
RUEHRL/AMEMBASSY BERLIN 0564
RUEHBS/USEU BRUSSELS
RHMFIUU/DEPT OF ENERGY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC

UNCLAS OSLO 001350 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE PLS PASS TO USTR FOR JASON BUNTIN 
STATE FOR EUR/NB RDALLAND, EB/ESC SGALLOGLY, KRIOS 
USDOC FOR 4212 MAC/EUR/OEURA 
USDOE FOR PI DPUMPHRY, ZHADDAD, LEKIMOFF; FE FOR 
EROSSI 
 
E.O. 12958: N/A 
TAGS: PREL EMIN EPET ENRG ETTC EINV IZ IR RU NO
SUBJECT:  EB A/S SULLIVAN MEETS NORWEGIAN DEPUTY FM 
          STUBHOLT ON MARGINS OF EITI CONFERENCE 
 
Summary 
------- 
 
¶1.  (SBU) Assistant Secretary for Economic and 
Business Affairs Dan Sullivan met October 20 on the 
margins of the Extractive Industries Transparency 
Initiative (EITI) Conference with Norwegian Deputy 
Foreign Minister Liv Monica Stubholt to discuss 
EITI and a range of international and bilateral 
issues, including energy investments in Russia, 
Iran and Iraq and a number of irritants in U.S.- 
Norwegian commercial relations.  They were in 
agreement on the importance of EITI's goals and 
principles, with Stubholt calling Norway's offer to 
host a permanent EITI secretariat a sign of its 
deep commitment to the process.  On energy, 
Stubholt emphasized that Norway's recent efforts to 
open Barents petroleum resources to development 
could contribute to U.S. energy security.  Both 
sides expressed concern about Western petroleum 
firms' recent troubles in Russia, particularly 
Gazprom's decision to exclude foreign firms from 
ownership stakes in the Shtokman field.  A/S 
Sullivan cautioned Stubholt about Norwegian oil 
companies' investments in Iran but welcomed 
Norwegian assistance to Iraq' petroleum sector, 
possibly in connection with the Compact for Iraq. 
 
¶2.  (SBU) Turning to bilateral matters, Stubholt 
appealed for U.S. flexibility on climate change 
language for the upcoming Arctic Council 
Ministerial statement.  A/S Sullivan raised several 
bilateral commercial irritants, including weak 
pharmaceutical patent protections, "blacklisting" 
U.S. firms from Norway's Government Pension Fund, 
and discriminatory vehicle taxes, but Stubholt 
signaled that Norway would give little ground. 
Wrapping up the meeting, Stubholt reacted 
positively to A/S Sullivan's request for support 
for Guatemala's UNSC bid and for U/S Sheeran's 
candidacy for a head of the World Food Program. 
End Summary. 
 
Strong Agreement on Benefits of EITI 
------------------------------------- 
 
¶3.  (SBU) A/S Sullivan and Stubholt agreed on the 
importance of EITI in enhancing transparency in the 
energy and mining industries in the developing 
world.  Noting the important role that U.S. and 
Norwegian petroleum companies played in the energy 
sectors of many developing nations, they concluded 
that the United States and Norway shared a common 
interest in EITI's success.  Stubhholt stressed 
that Norway's willingness to host a permanent EITI 
secretariat in Oslo demonstrated its strong 
 
SIPDIS 
commitment to the initiative.  (Note and comment: 
Germany has also offered to host the EITI 
secretariat.  Norway, as a leading exporter of 
 
SIPDIS 
hydrocarbons and an exemplary model of transparency 
in the energy sector, would appear to be the more 
logical choice.  End note and comment.) 
 
Barents Oil/Gas Could Enhance U.S. Energy Security 
--------------------------------------------- ------ 
 
¶4.  (SBU) Stubholt briefed A/S Sullivan on Norway's 
efforts to open the petroleum resources of the 
Barents Sea region to exploration and development. 
She stressed that developing High North energy 
resources could contribute to U.S. energy security 
by offering additional sources of supply, 
particularly of natural gas, to the U.S. market. 
A/S Sullivan noted that he had met with Statoil 
 
executives the day before to discuss the company's 
plans in the Barents and was particularly impressed 
with the cutting-edge offshore technologies that 
had made development of remote subsea Arctic 
resources a reality.  (Note:  Statoil will begin 
exporting LNG from the Barents Sea's "Snoehvit" 
field to Cove Point, Maryland next year.  End 
note.) 
 
Troubled Times for Energy Investors in Russia 
--------------------------------------------- - 
 
¶5.  (SBU) Turning to Russia, Stubholt expressed 
disappointment at reports that Gazprom had decided 
to exclude Western partners from ownership shares 
in the vast Shtokman natural gas field.  She noted 
that neither Statoil nor Norsk Hydro, the two 
Norwegian petroleum companies on Gazprom's short 
list of potential partners in the project, had 
heard anything official from Gazprom.  She thought 
the companies would "stay in for the long haul" in 
Russia in spite of the disappointing news and could 
perhaps take advantage of opportunities to develop 
Shtokman on a contractual basis if they could not 
take an ownership stake.  The recent hurdles facing 
Western oil companies in Sakhalin were an even more 
troubling development, as Russia seemed to be 
changing the rules of the game after significant 
investments had already been made.  A/S Sullivan 
agreed, noting that much work had gone into 
negotiating a set of energy security principles 
with Russia for this summer's G-8 Summit in St. 
Petersburg, but Russia had fallen far short in 
implementing them. 
 
Caution on Energy Investments in Iran 
--------------------------------------- 
 
¶6.  (SBU) A/S Sullivan cautioned Stubholt that 
Norwegian petroleum firms' investments in Iran 
raised serious concerns under the Iran-Libya 
Sanctions Act (ILSA).  He noted that Congress had 
recently renewed that Act in conformity with 
previously existing principles, but that there had 
been a concerted, though unsuccessful, effort to 
strengthen the sanctions.  He urged Stubholt to 
bear ILSA in mind because the issue of investments 
in Iran had assumed a very high profile in 
Washington.  Stubholt responded that all petroleum 
companies, Norway's included, were increasingly 
aware of geopolitical concerns and exercising 
greater corporate responsibility in making 
investment decisions. 
 
Hope for Energy Investments in Iraq 
------------------------------------- 
 
¶7.  (SBU) A/S Sullivan cited Iraq as another 
example of a nation where petroleum companies could 
exercise significant influence.  He noted that 
Kurdistan and the central government had drafted 
competing petroleum investment laws and cautioned 
that making investments under regional laws risked 
encouraging separatist tendencies.  Stubholt 
agreed, stressing the need for governments and 
petroleum firms to consult closely on investments 
in Iraq.  (Note:  A small Norwegian petroleum firm, 
DNO, has concluded a deal with Kurdish authorities 
to develop an oil field on northern Kurdistan.  So 
far, the Norwegian majors have held back on 
investing in Iraq but have participated in Norway's 
bilateral assistance program for the Iraqi oil 
sector.  End note.) 
 
¶8.  (SBU) A/S Sullivan briefed Stubholt on the 
Compact for Iraq and suggested that Norway could 
contribute by providing technical assistance to the 
Iraqi oil sector.  Stubholt responded that Norway 
was following the Compact with interest and a 
"positive attitude."  She noted that Norway had 
already allocated about 30 million NOK 
(approximately USD 4.5 million) for bilateral 
assistance to Iraq's Ministry of Oil, though the 
program was not moving as quickly as it could. 
 
Appeal for Arctic Council Attention and Compromise 
--------------------------------------------- ------ 
 
¶9.  (SBU) Stubholt urged greater U.S. attention to 
the Arctic Council, a forum for addressing Arctic 
issues whose members include the United States, 
Norway, Finland, Sweden, Denmark, Iceland, Canada 
and Russia.  She requested A/S Sullivan to convey 
an appeal to appropriate U.S. officials to 
compromise on climate change language in a draft 
ministerial statement to be issued in late October. 
 
No Traction on Bilateral Commercial Irritants 
--------------------------------------------- - 
 
¶10.  (SBU) A/S Sullivan raised three bilateral 
commercial concerns -- Norway's weak patent system 
for pharmaceuticals, the Government Pension Fund's 
divestment from U.S. firms for allegedly unethical 
behavior, and new taxes on light trucks that have 
decimated the market for such U.S. vehicles in 
Norway.  On pharmaceutical patents, Stubholt 
insisted that Norway was in compliance with its 
Trade Related Aspects of International Property 
Rights Agreement commitments and had struck an 
appropriate balance between patent protections and 
ensuring reasonable drug prices.  She disputed that 
Norway's weak pharmaceutical patent protections 
tended to undermine innovation and was adamant that 
Norway would not change its system to address U.S. 
concerns.  A/S Sullivan reiterated that adequate 
IPR protections were the "heart and soul" of the 
American culture of innovation and urged remedial 
action. 
 
¶11.  (SBU) Regarding the "blacklisting" of U.S 
firms by the Pension Fund, Stubholt argued that the 
government's ethical investment guidelines complied 
with international standards and were administered 
by an independent commission whose decisions were 
non-political.  She noted U.S. concerns about 
procedural deficiencies in the guidelines and the 
preponderance of U.S. firms on the Fund's 
blacklist, concerns which the Ambassador laid out 
in a recent speech that received prominent press 
play.  She acknowledged the importance of examining 
any flaws in the process that might exist and 
suggested the government might conduct an 
assessment of the guidelines and consider changes 
"after an appropriate time." 
 
¶12.  (SBU) Stubholt did not respond on the light 
truck tax issue. 
 
Support for UNSC and WFP Candidates 
------------------------------------ 
 
¶13.  (SBU) A/S Sullivan wrapped up the meeting by 
requesting Norway's support for Guatemala's UN 
Security Council candidacy and for Under Secretary 
Sheeran's candidacy for head of the World Food 
Program.  Stubholt responded positively on both 
counts, noting with respect to the latter that 
 
Norwegian Prime Minister Jens Stoltenberg enjoyed 
an excellent working relationship with U/S Sheeran. 
 
¶14.  (U) Assistant Secretary Sullivan has cleared 
this cable. 
JOHNSON