VZCZCXRO3256
PP RUEHMA RUEHPA
DE RUEHUJA #1109/01 1700740
ZNR UUUUU ZZH
P 190740Z JUN 09
FM AMEMBASSY ABUJA
TO RUEHC/SECSTATE WASHDC PRIORITY 6351
INFO RUEHOS/AMCONSUL LAGOS 1536
RUEHGB/AMEMBASSY BAGHDAD 0393
RUEHZK/ECOWAS COLLECTIVE
RHEBAAA/DEPT OF ENERGY WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC

UNCLAS SECTION 01 OF 02 ABUJA 001109 
 
SENSITIVE 
 
SIPDIS 
 
DEPT FOR OES/EGC FOR MOORE AND FOR EEB/ESC/IEC/ENR HENRY 
DEPT PASS TO USAID AFR/SD FOR CURTIS AND ATWOOD 
DEPT PASS TO USTR-AGAMA, USTDA-MARIN AND EXIM-RICHTER 
BAGHDAD FOR MCCULOUGH 
DEPT OF ENERGY FOR GEORGE PERSON 
TREASURY FOR PETERS AND IERONIMO 
DOC FOR 3317/ITA/OA/BURRESS, 3130/USFC/OIO/ANESA/HARRIS 
 
E.O. 12958: N/A 
TAGS: EPET SENV ENRG ECON EIND EINV TRGY TPHY NI
SUBJECT: NIGERIA:  DAS HENGEL MEETS WITH GON PERM SEC FOR PETROLEUM 
RESOURCES 
 
REF:  ABUJA 1050 
 
SENSITIVE BUT UNCLASSIFIED; NOT FOR DISSEMINATION OUTSIDE OF USG 
 
¶1. (SBU)SUMMARY:  After the conclusion of a two-day U.S.-NIGERIA 
roundtable on energy and climate change (Reftel), the U.S. 
delegation, headed by Deputy Assistant Secretary Douglas Hengel of 
the Bureau of Economic, Energy, and Business Affairs, met on May 22 
with the Permanent Secretary of the Nigerian Ministry of Petroleum 
Resources, Mr. Adefemi Sola Olayisade, to explore next steps.  DAS 
Hengel expressed U.S. appreciation for Nigeria's partnership on a 
range of issues and his satisfaction with the discussions at the 
roundtable.  The DCM outlined the various assistance and development 
programs that the US Mission is undertaking.  Olayisade expressed 
the GON's gratitude for U.S. development assistance, praised the 
strong US-Nigerian relations, and gave a brief overview of GON 
reforms in the oil and gas sector.  He expressed GON's interest to 
partner with the U.S. on developing Nigeria's oil and gas sector and 
encouraged the U.S. to identify potential areas of interest in the 
sector.  Throughout the two days of engagement (May 21 -22), the 
constant refrain of Nigerian officials was how the new U.S. energy 
policy would affect U.S. demand for Nigeria hydrocarbons.  The U.S. 
delegation, while clearly stating the unsustainability of current 
global rate of fossil fuel consumption and U.S. determination to 
find solutions, assured Nigerian counterparts that U.S. demand for 
Nigerian oil and gas will remain high for the foreseeable future. 
As Nigeria refines and fine tunes its oil and gas reform agenda, the 
Mission will stay in touch with key players to encourage 
transparency and a better outcomes.  End Summary. 
 
Nigeria Sees Nexus between Energy and the Environment 
--------------------------------------------- -------- 
 
¶2. (SBU) After a brief exchange of pleasantries and a brief summary 
of the preceding two day's (May 21-22) discussions at the 
roundtable, DAS Hengel noted the unsustainable nature of current 
global rate of fossil fuel consumption and the U.S.'s determination 
to find solutions in partnership with others nations.  George 
Person, Director for Africa and Middle Eastern Affairs at the 
Department of Energy, added that, although the U.S. is determined to 
find solutions to the current unsustainable rate of fossil fuel 
consumption, demand for Nigerian oil and gas will remain high for 
the foreseeable future.  The DCM outlined the various assistance and 
development programs that the US Mission is undertaking.  On climate 
change, the U.S. delegation stated that the U.S. is in a listening 
mode and that the new Obama Administration has introduced 
legislation in the US House of Representatives to enable it to 
negotiate at Copenhagen and beyond.  (Note:  Olayisade declined to 
comment on climate change and the GON's position on the issue saying 
the issue is under the purview of the Ministry of Environment.  The 
Minister of Environment, Minster of State for Petroleum Resources, 
and the Group Managing Director of the Nigerian National Oil Company 
were expected at the meeting but did not attend due to a 
simultaneous visit by the French Prime Minster.  End Note). 
Olayisade noted that because of the clear nexus between energy 
utilization and its impact on the environment, the GON has put 
together an integrated reform agenda for both the oil and gas 
sector.  He said the reform will enable the GON to tackle the twin 
problems of electricity shortage and environmental degradation due 
to gas flaring. 
 
Nigeria Reforming its Oil and Gas Sector 
---------------------------------------- 
¶3. (SBU) According to the Permanent Secretary a lot has been 
happening in the Nigerian energy sector since last year -- beginning 
with the breakup of the Ministry of Energy into the Ministries of 
Power and Petroleum Resources.  Olayisade said that the current 
reform agenda consists of the Oil and Gas Reform Bill, under 
consideration by the Nigerian National Assembly, and the Gas Master 
Plan, which has been approved by the Federal Executive Counsel and 
its execution began.  He stated that the Oil and Gas Reform Bill 
will restructure the Nigeria National Petroleum Corporation (NNPC) 
giving it more commercial orientation.  He noted that the sector 
will be fully deregulated to encourage joint ventures in the 
upstream and downstream sectors, attract investment, and introduce 
operational efficiency and effectiveness. 
 
ABUJA 00001109  002 OF 002 
 
 
¶4. (SBU) Olayisade noted that the new Gas Master Plan, which has 
been approved by the Federal Executive Council and whose execution 
has begun, will guide GON efforts to enhance gas utilization for 
power generation and reduce gas flaring associated with oil 
production.  He noted that despite Nigeria's proven huge gas 
reserves, historically the focus has been on the oil sector to the 
detriment of benefits from gas.  He said that there is a huge 
domestic, regional and international market for Nigeria's natural 
gas and that the master plan will expand significantly existing gas 
collection and distribution network, which will enable localized 
power generation.  He described current GON security operations in 
the Niger Delta as a necessary step to weed out criminal gangs 
hampering development and predicted that the Delta will be open for 
business soon.  Olayisade stated that 15 companies (12 foreign and 3 
local) have been selected to be core investors in the gas sector 
under the new Gas Master Plan.  He expressed GON interest in a 
U.S.-Nigeria partnership in the oil and gas sector and asked that 
the U.S. identify specific opportunities in the sectors. 
 
¶5. (SBU) COMMENT:  The meeting with Perm Sec Olayisade, which 
followed on the heels of the two-day U.S.-GON roundtable on energy 
and climate change, provided a platform to recap discussions at the 
roundtable and explore future partnership in the oil and gas sector. 
 Throughout the two days of engagement (May 21 -22), the constant 
refrain of Nigerian officials was how the new U.S. energy policy 
would affect U.S. demands for Nigerian oil.  The U.S. delegation 
used the opportunity to assure GON interlocutors that demand for 
Nigerian oil and gas will remain high for the foreseeable future, 
while noting the unsustainable nature of current consumption 
patterns of fossil fuel and the U.S.' determination to find 
solutions.  The U.S. Mission recommends seizing the opportunity to 
form a partnership with the GON on the oil and gas sector.  The 
Mission will continue to engage the GON as it moves forward with its 
reform agenda for the oil and gas sector to encourage a transparent 
process and better outcome. 
 
¶6. (U) State/EEB and Consulate Lagos cleared this cable. 
 
SANDERS