VZCZCXRO5188
RR RUEHTRO
DE RUEHIN #4201 3620910
ZNR UUUUU ZZH
R 280910Z DEC 06
FM AIT TAIPEI
TO RUEHC/SECSTATE WASHDC 3564
INFO RUEHBJ/AMEMBASSY BEIJING 6136
RUEHBY/AMEMBASSY CANBERRA 4397
RUEHJA/AMEMBASSY JAKARTA 3969
RUEHUL/AMEMBASSY SEOUL 8354
RUEHGP/AMEMBASSY SINGAPORE 6728
RUEHKO/AMEMBASSY TOKYO 8328
RUEHTRO/AMEMBASSY TRIPOLI 0005

UNCLAS TAIPEI 004201 
 
SIPDIS 
 
SIPDIS 
 
DOE OIC FOR PUMPHREY/PRICE 
 
E.O. 12958: N/A 
TAGS: ECON ENRG EPET PREL LY TW
SUBJECT: TAIWAN GRANTED ACCESS TO LIBYAN OIL 
 
REF: TAIPEI 4158 
 
¶1.  (U) According to Dec. 22 news reports, Taiwan's 
state-owned Chinese Petroleum Corporation (CPC) won oil 
exploration rights in Libya.  CPC will invest US$39 million 
over the next three years explore and develop the Murzuq 162 
block oil concession.  In September, Libya invited bids for 
oil exploration in 41 blocks.  CPC submitted bids for two 
blocks to the Libyan National Oil Corp (NOC).  It won the 
Murzuq block but was slightly outbid on the Ghadames 82 
block.  The Murzuq Basin is in Western Libya, 600 km 
south-west of Tripoli and produces about 5 percent of Libya's 
oil.  CPC will conduct seismic surveys along 1600 km and 
drill three test wells.  The 4,300 square kilometer area is 
estimated to contain up to 5 billion barrels of oil.  A 
contract is scheduled to be signed in mid-January of 2007 
between CPC and the Libyan National Oil Corp.  Other bid 
winners included Russia, Canada and Germany. 
 
ENERGY DEPENDENCY AND INVESTMENT POLICY 
--------------------------------------- 
 
¶2.  (U) Taiwan imports virtually all of the oil it consumes, 
70 percent of which comes from the Middle East and the rest 
from Southeast Asia, Australia, Africa and Central Asia.  In 
2005 imports amounted to 221.6 million barrels of crude oil. 
This heavy dependence on foreign energy sources, the rising 
cost of crude oil and the increasing international trend of 
bi-lateral energy agreements between nations instead of open 
markets, has driven Taiwan to seek reliable sources of oil 
and gas.  CPC initiated the Libyan venture soon after 
sanctions were lifted from the North African country in 2004. 
 
 
JOINT VENTURES TO LOWER RISKS 
----------------------------- 
 
¶3.  (U)  CPC, through its wholly owned subsidiary, Overseas 
Petroleum Investment Corporation (OPIC), has invested in 
energy projects in Australia, Indonesia, Ecuador, Venezuela, 
and Chad.  Most of the investment has been in the form of 
joint ventures with the oil majors or state oil companies in 
the host countries.  CPC sources indicated to AIT that in 
Australia CPC owns only 25 percent of its oil investment 
project, in Indonesia 17 percent, in Venezuela 7.5 percent, 
in Ecuador 30-31 percent.  In Chad, CPC holds a 70 percent 
share of the investment together with Chadian authorities but 
plans to reduce that share to 30 percent.  According to CPC 
sources, since CPC began investing in overseas oil it has 
made a net profit to date of NT$125 billion on NT$236 billion 
invested ($1.00 = NT$32.00).  Currently, all oil from CPC's 
overseas ventures is sold abroad since the cost of selling it 
on the local market would be prohibitive.  CPC estimates that 
up to one third of its future revenue will be derived from 
overseas exploration. 
WANG