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O 261014Z DEC 06
FM AMEMBASSY BEIJING
TO RHMFIUU/DEPT OF ENERGY WASHINGTON DC IMMEDIATE
RUEHC/SECSTATE WASHDC IMMEDIATE 3351
INFO RUEHOO/CHINA POSTS COLLECTIVE IMMEDIATE
RUCNMEM/EU MEMBER STATES COLLECTIVE IMMEDIATE
RUCNIRA/IRAN COLLECTIVE IMMEDIATE
RUEHIL/AMEMBASSY ISLAMABAD IMMEDIATE 6494
RUEHKL/AMEMBASSY KUALA LUMPUR IMMEDIATE 2416
RUEHMO/AMEMBASSY MOSCOW IMMEDIATE 8510
RUEHNE/AMEMBASSY NEW DELHI IMMEDIATE 4258
RUEHNY/AMEMBASSY OSLO IMMEDIATE 0854
RUEHUNV/USMISSION UNVIE VIENNA IMMEDIATE 1136

UNCLAS BEIJING 024779 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
DEPT FOR EAP/CM AND EB/ESC SIMONS 
DOE OIC FOR PUMPHREY, OEA FOR CUTLER 
 
E.O. 12958: N/A 
TAGS: ECON EINV ETTC ENRG EPET PREL IR CH
SUBJECT: CHINA/ENERGY: EMBASSY OBJECTS TO CNOOC ON REPORTED 
USD 16 BILLION DEAL TO DEVELOP IRAN'S NORTHERN PARS GAS 
FIELD 
 
REF: A. SECSTATE 194960 
     ¶B. EIGHMIE-LUKE 12/20/06 E-MAIL 
 
¶1. (SBU) Reuters reported on December 20 that the China 
National Overseas Oil Corporation (CNOOC) and Iran reached 
agreement to develop Iran's northern Pars gas field and build 
liquefied natural gas.  The Department asked us to confirm 
with CNOOC if the report was accurate (ref. B).  While 
CNOOC,s initial responses were ambivalent, continual press 
reports indicated that an agreement was likely. 
 
¶2. (SBU) Consistent with earlier guidance (ref. A), we 
delivered on December 21 talking points from ref. A (see 
paragraph 4) to CNOOC,s External Affairs Division Department 
Program Officer Lu Xiaofeng, in order to put CNOOC on notice 
of the United States, position on energy deals with Iran. 
 
¶3. (SBU) While Lu said that he would provide an official 
CNOOC response, so far, no response has been forthcoming.  We 
will deliver tomorrow similar talking points to the Iran 
Division, West Asia and North African Department of the 
Ministry of Foreign Affairs. 
 
¶4. (SBU) Talking points delivered to CNOOC on December 21: 
 
--  Press reports indicate that an agreement between CNOOC 
and Iran for development of the Pars gas field may be struck. 
 
--  The United States continues to have deep concerns about 
Iranian policies and actions ) in particular, at this time, 
Iran's nuclear activities, which we believe are aimed at 
establishing a nuclear weapons capability. 
 
--  As we have indicated in the past, in light of Iran's 
policies and actions, we have long opposed investment in 
Iran's oil and gas sector, and United States law, with 
provisions that were recently reauthorized by Congress, 
provides for sanctions for certain such investments. 
 
--  Iran has failed to comply with UN Security Council 
resolution 1696, which calls on Iran to suspend 
enrichment-related and reprocessing activities and to 
cooperate fully with the IAEA.  As a result, as you know, 
discussions are underway in New York on a Chapter VII 
sanctions resolution. 
 
--  This is therefore a particularly unfortunate time to be 
entering into agreements for energy projects in Iran. 
 
--  Doing so, in addition to raising ongoing United States, 
concerns about energy-sector investment, sends precisely the 
wrong signal to Iran by suggesting that business-as-usual is 
appropriate, and that notwithstanding Iran's obduracy, new 
deals involving its energy resources are of paramount 
importance. 
 
--  We hope CNOOC will reconsider any plans to move forward 
on concluding an agreement with Iran on the Pars gas field 
particularly at this sensitive time. 
 
¶5. (SBU) Although we have not received an official response 
from CNOOC, Chinese press have also reported on the 
Iran-CNOOC oil deal.  Embassy will provide CNOOC,s official 
response as soon as it is received. 
 
SEDNEY