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PP RUEHMA RUEHPA
DE RUEHUJA #1050/01 1631031
ZNR UUUUU ZZH
P 121031Z JUN 09
FM AMEMBASSY ABUJA
TO RUEHC/SECSTATE WASHDC PRIORITY 6286
INFO RUEHOS/AMCONSUL LAGOS PRIORITY 1506
RUEHGB/AMEMBASSY BAGHDAD 0375
RUEHZK/ECOWAS COLLECTIVE
RHEBAAA/DEPT OF ENERGY WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC

UNCLAS SECTION 01 OF 03 ABUJA 001050 
 
SENSITIVE 
SIPDIS 
 
DEPT PASS USAID FOR AFR/SD 
DEPT PASS TO USTR FOR AGAMA 
BAGHDAD FOR DUNDAS MCCULLOUGH 
USDOE FOR GEORGE PERSON 
TREASURY FOR PETERS, IERONIMO 
DOC/ITA/OA FOR KBURRESS, OIO FOR ANESA AND DHARRIS 
 
E.O. 12598: N/A 
TAGS: EPET SENV ECON EINV ENRG EAID PGOV NI
SUBJECT: NIGERIA-US ROUNDTABLE ON ENERGY AND CLIMATE CHANGE SETS 
STAGE FOR FURTHER COOPERATION 
 
SENSITIVE BUT UNCLASSIFIED - NOT FOR DISTRIBUTION OUTSIDE OF THE 
U.S. GOVERNMENT 
 
¶1. (SBU) Summary.  From May 21-22 2009, a U.S. delegation headed by 
Douglas Hengel, Deputy Assistant Secretary for Economic, Energy and 
Business Affairs of the U.S. Department of State, held roundtable 
discussions on energy and climate change issues with counterparts 
from the Government of Nigeria (GON).  The U.S. delegation, which 
also included Department of Energy and OES/Office of Global Change 
representatives, heard presentations on GON reform efforts underway 
in the oil and gas sector, which aim to transform the Nigerian 
National Petroleum Corporation (NNPC) into a more commercially 
oriented organization.  GON officials also briefed the U.S. 
delegation on Nigeria's power sector reform, aimed at generating 
6,000 Megawatts of by December 2009.  Nigerian oil and gas sector 
officials repeatedly expressed their desire to know how the new U.S. 
Administration's energy policy will affect U.S. demand for Nigerian 
oil and gas.  Nigerian Minster of Environment John Odey stated that 
the impact of climate change on Nigeria is real and expressed his 
country's desire to receive assistance in developing appropriate 
adaptation and mitigation measures.  The GON asked that the U.S. 
coordinate closely with Nigeria and other oil and gas producing 
countries in the Copenhagen round of negotiations on climate change. 
 The U.S. Delegation, while pointing out the unsustainable nature of 
current levels of global fossil fuel consumption and the Obama 
Administration's determination to find green energy solutions, 
assured GON counterparts that U.S. and world demand for Nigerian 
hydrocarbons will remain high for the foreseeable future.  The 
delegation stated that the U.S. is in a listening mode on climate 
change issues.  Notably, Nigerian officials stated that they did 
not/not want to take on any obligations to reduce greenhouse gas 
emissions; although they recognized that it is very much in the 
country's interest to reduce gas flaring and deforestation. 
Although Nigerian hosts took a "with us or against us" approach on 
their efforts to restructure the oil and gas sector, they were in 
fact themselves taking another look at related legislation and 
remain open to U.S. technical assistance - which can help ensure 
sector stability and rational commercial terms for U.S. and other 
companies in the sector.  Both sides agreed to continue the dialogue 
on energy and climate policies.  The U.S. Mission will continue to 
engage the NNPC and Ministries of Petroleum Resources, Power and the 
Environment as Nigeria refines and implements reforms in the oil and 
gas and power sectors while it works to be more proactive on climate 
mitigation and adaptation.  End Summary. 
 
Energy and Climate Roundtable Held in Abuja 
------------------------------------------- 
 
¶2. (SBU) From May 21- 22 2009, a U.S. delegation headed by Doug 
Hengel, Deputy Assistant Secretary for Economic, Energy and Business 
Affairs of the U.S. Department of State, and including 
representatives from the Bureau of Oceans, Environment and Science 
and the Department of Energy, and held roundtable discussions on 
energy and climate issues with counterparts from the Government of 
Nigeria (GON).  GON officials led by Emmanuel Egbogah, Special 
Adviser to President Yar'Adua on Petroleum Matters, and Mohammed 
Barkindo, Group Managing Director (GMD) of Nigerian National 
Petroleum Corporation (NNPC), and Minister for Power Rilwan Babalola 
gave presentations on ongoing efforts to reform Nigeria's oil and 
gas sector and make progress on electricity supplies.  Minister of 
Environment John Odey also attended the roundtable. 
 
¶3. (SBU) During his welcome address, the NNPC's GMD praised the 
timeliness of the roundtable in light of the Obama Administration's 
new policies on energy and climate change.  Given Nigeria's 
dependence on revenues from its oil and gas sector, Barkindo 
emphasized his country's need to understand the likely consequences 
of the new policy on U.S. demand for Nigerian oil and gas.  He 
implored the U.S. to explore options to minimize the impact on 
Nigeria.  Barkindo stated that Nigeria and some other developing 
countries would not have signed on to the Kyoto Protocol, if it had 
not been for the positive commitment by the USG in the course of 
Kyoto discussions.  (Note: Barkindo was co-chair of the Nigerian 
delegation during Kyoto negotiations.  End Note).  He argued that 
developed countries bear the greatest historical responsibility for 
emissions and should be responsible for the solution, and that 
developing countries should have no/no obligations under a 
Copenhagen accord.  US DEL pointed out that if developing nations do 
 
ABUJA 00001050  002 OF 003 
 
 
not/not reduce emissions then emissions will rise even if developed 
economies reduce theirs to zero. 
 
¶4. (SBU) DAS Hengel stressed the unsustainability of the current 
trajectory of fossil fuel consumption and the determination of the 
U.S. to find lower-carbon solutions.  He noted that the U.S. had 
introduced domestic legislation on climate change, which will have 
an impact on U.S. negotiations towards a Copenhagen agreement.  The 
U.S. delegation also emphasized that the U.S. is currently in a 
listening mode on climate change as it puts together its position 
for Copenhagen. 
 
¶5. (U) Minister of Environment John Odey said that the impact of 
climate change is real and that his ministry would like to develop 
and deploy appropriate mitigation and adaptation measures.  He 
wondered aloud whether there will be assistance for developing 
countries to implement such measures.  It was clear that Nigerian 
officials at the roundtable realized that their country has much to 
gain from reducing gas flaring and slowing and reversing 
deforestation. 
 
Oil and Gas Reform 
------------------ 
 
¶7. (SBU) Barkindo described the Petroleum Industry Bill (PIB), under 
consideration by the Nigerian National Assembly, and the Gas Master 
Plan, which has been approved by the Federal Executive Council. 
Both he and Special Advisor Egbogah projected "you're either with us 
or against us" on current restructuring efforts.  Barkindo stated 
that the PIB will restructure the Nigeria National Petroleum 
Corporation, giving it a more commercial orientation.  He noted that 
the sector will be "fully deregulated" to encourage joint ventures 
and investment in the upstream and downstream markets and to 
introduce operational efficiency and effectiveness.  Barkindo vowed 
to fight the "cabals" that are resisting the proposed deregulation 
of the petroleum downstream sector, which will lead to, among other 
things, the withdrawal of government subsidies to importers of 
refined fuel.  (Note:  Nigerians have been enduring long lines at 
gas stations due to shortage of gasoline and diesel.  Barkindo 
attributed this shortage to deliberate sabotage of the market system 
by gasoline importers and distributors.  End Note). 
 
¶8. (SBU) Dr. Emmanuel Egbogah, Special Adviser to President Yar'Adua 
on Petroleum Matters, also briefed the U.S. delegation on the 
ongoing reform in the Nigerian oil and gas sector.  He said that the 
current reforms will introduce structural, legislative, commercial 
and operational changes to bring the industry in line with global 
standards.  He emphasized that the reforms will transform the NNPC 
into an integrated, commercial oil and gas corporation driven by 
revenue generation and profits.  This will enable the corporation to 
raise funds for its operations, according to Egbogah.  Under the 
reform plan the NNPC will be broken into the following entities: 
 
-- National Petroleum Directorate - will have responsibility for 
policy initiation and formulation; 
 
-- National Petroleum Inspectorate - an autonomous stand alone 
technical regulator and will replace the current Department of 
Petroleum Resources (DPR); 
 
-- National Petroleum Assets Management Agency - will manage 
petroleum assets and sets costs and commercial regulations.  It will 
replace the National Petroleum Investment & Management Services 
(NAPIMS); 
 
-- Petroleum Products Regulatory Authority - will regulate the 
commercial aspects of the downstream sector of the industry; and 
 
-- Commercial Center - will manage commercial outlets for the sale 
of petroleum products and would compete both locally and 
internationally. 
 
Note:  Although at the roundtable Egbogah resisted comments that 
certain provisions of the PIB and separate local content legislation 
could hinder investment and production, he clearly also recognizes 
that incentives and other conditions truly do have to adhere to 
global standards to attract much-needed investment.  During his 
presentation he pledged that all stakeholders would be consulted on 
 
ABUJA 00001050  003 OF 003 
 
 
the legislative proposals.  Following the conclusion of the 
roundtable, Egbogah approached Embassy Industries and Infrastructure 
Officer to say he was eager to meet to discuss the way forward.  End 
Note. 
 
Power Sector Reforms 
-------------------- 
 
¶9. (SBU) Dr. Lanre Babalola, Minister of Power, said that the GON 
plans to generate 6,000 megawatts of power by December 2009. He 
mentioned that as part of its reform agenda, the GON will 
rehabilitate old power plants and diversify its power production 
using gas, coal, hydro and solar sources.  Babalola added that the 
GON will generate an additional 4,800 megawatts of new capacity with 
the completion of the National Integrated Power Project (NIPP), 
which will bring total supply to more than 10,000 megawatts by 2011. 
 In side conversations, it was clear that GON authorities will need 
to exercise flexibility so that distributed/off-grid generation is 
increasingly part of the power mix, along with renewables. 
 
COMMENT 
------- 
 
¶10.  (SBU) The two day dialogue between the U.S. and Nigeria on 
energy and climate change issues provided a platform for exchange of 
ideas and possible areas of future collaborations.  The GON's 
evolving oil and gas reform agenda is aimed at liberalizing the gas 
and oil industry, which Nigeria needs in order to better manage its 
petroleum resources and meet domestic and export demands for its 
petroleum products.  At the same time, the GON needs help to ensure 
that legislation before the National Assembly promotes reform and 
doesn't hurt sector productivity.  To that end, NNPC has provided 
the Assembly with recent memoranda on both the PIB and the local 
content legislation-but there is still much work to be done.  GON 
officials were clearly concerned about the impact of new U.S. green 
energy policies on demand for Nigeria's oil and gas exports.  The 
GON's position for the Copenhagen climate change negotiations is 
evolving but officials certainly hope this round will yield offsets 
which will help them address gas flaring and possibly deforestation 
as well.  Mission will continue to engage concerned GON entities as 
it refines and fine tunes its oil and gas sector reform as well as 
its positions for negotiations on climate change at Copenhagen. 
 
 
¶11. (U) The Delegation has cleared this message. 
 
¶12. (U) This cable has been cleared by Consulate Lagos. 
 
SANDERS