VZCZCXRO5569
OO RUEHROV RUEHTRO
DE RUEHKH #1319/01 3270858
ZNR UUUUU ZZH
O 230858Z NOV 09
FM AMEMBASSY KHARTOUM
TO RUEHC/SECSTATE WASHDC IMMEDIATE 4775
INFO RUCNIAD/IGAD COLLECTIVE
RUEHGG/UN SECURITY COUNCIL COLLECTIVE
RHMFISS/CJTF HOA

UNCLAS SECTION 01 OF 02 KHARTOUM 001319 
 
SENSITIVE 
SIPDIS 
 
NSC FOR MGAVIN, LETIM 
DEPT PLS PASS USAID FOR AFR/SUDAN 
ADDIS ABABA ALSO FOR USAU 
 
E.O. 12958: N/A 
TAGS: EPET PGOV PREL ECON EFIN SU
SUBJECT: Energy Ministry Official Says Sudan's Oil to Run Out by 
2025 
 
¶1.  (SBU) Summary:  On November 9, Hamad Elneel Abdulgadir, Deputy 
Secretary General of the Ministry of Energy and Mining (MEM) 
complained to Poloff that the Ministry's efforts in training 
Southern Sudanese for oil industry jobs had been a failure, one 
reason that the National Petroleum Commission (NPC) is not 
functioning.  The Assessment and Evaluation Commission (AEC) ignores 
flagrant violations of the Comprehensive Peace Agreement (CPA) by 
the Government of South Sudan, he claimed.  In light of the fact 
that many of Sudan's current oil producing wells will run dry by 
2025, the South's desire to build an oil refinery is uneconomic and 
unwise.  End Summary. 
 
--------------------------------- 
Few Southerners Know Oil Industry 
--------------------------------- 
 
¶2.  (SBU) Deputy Secretary General of the Ministry of Energy and 
Mining (MEM) in the Government of National Unity (GNU), Hamad Elneel 
Abdulgadir, said the National Petroleum Commission (NPC) is 
suffering because of lack of professional expertise in Southern 
Sudan.  (Note: The NPC, an independent body established by the CPA, 
is charged with formulating policies for the management of the oil 
sector and with negotiating contracts, but the NPC has only met a 
few times since 2005.  End Note) He also accused the Government of 
Southern Sudan (GOSS) of appointing people to the MEM who are not 
qualified to work in the oil sector.  As a result, the Ministry 
operates at substandard levels in executing oil policy, he claimed. 
Abdulgadir expressed frustration at the failure of attempts to train 
and professionalize a Southern Sudanese staff at the MEM despite 
what he described as extraordinary amounts of money spent on 
lectures and visits to oil fields.  He blamed the Southern Sudanese 
who participated in training programs in Norway and Malaysia for 
failing to take full advantage of the opportunities.  One reason for 
the failure has been the lack of trust between the parties.  "They 
don't trust us so we must seek third parties to communicate with the 
South," Abdulgadir said.  Both the North and South agreed to the 
Norwegians as consultants on oil sector issues, and the MEM has 
provided them with access to oil revenue records and information. 
Abdulgadir said he personally had trained Yousif Ramadan of the 
Southern People's Liberation Movement (SPLM); Ramadan is now 
responsible for keeping track of the oil revenues for the GOSS. 
Ramadan succeeded because he willingly seized every opportunity to 
learn the oil trade, Abdulgadir noted. 
 
--------------------------------------------- --- 
Assessment and Evaluation Commission Not Helping 
--------------------------------------------- --- 
 
¶3.  (SBU) Abdulgadir also placed blame for problems in the petroleum 
sector operations on the Assessment and Evaluation Commission (AEC), 
which is responsible for monitoring CPA implementation.  He 
described the AEC as a "weak organization" because it fails to do 
anything about what he alleged were "flagrant violations of the 
Wealth Sharing Protocol of the CPA."  The GOSS is putting up for 
re-concession some oil blocks, despite the fact that these contracts 
had been negotiated and signed before the CPA took effect.  The AEC 
merely watches; it does nothing to stop the GOSS from acting, he 
complained.  (Note: Section 4.2 of the Wealth Sharing Protocol of 
the CPA provides that existing oil contracts "shall not be subject 
to re-negotiation."  End Note)  In addition, he claimed, the South 
is creating its own oil ministry and making decisions about oil 
resources in violation of the CPA.  Abdulgadir said he had given a 
number of presentations on these points to the AEC, but without 
response. 
 
---------------------------- 
Current Fields Spent by 2025 
---------------------------- 
 
¶4.  (SBU) Most of Sudan's currently producing fields will be spent 
by 2025, Abdulgadir claimed.  As a result, the South's desire to 
build an oil refinery is uneconomic and unwise, he said.  The MEM 
has already advised against building the refinery because the South 
has not yet conducted a feasibility study.  He added that the GNU 
State Minister of Energy and Mining Angelina Teny also warned the 
GOSS not to build the refinery without further study, but officials 
in Juba have reportedly ignored her and have green-lighted the 
project. 
 
------------------------------------- 
South Sudan Has No Post 2011 Oil Plan 
------------------------------------- 
 
¶5.  (SBU) Abdulgadir said that with the many challenges facing 
Sudan, now is not the right time for the South to secede; 
 
KHARTOUM 00001319  002 OF 002 
 
 
nonetheless, he believes secession will occur.  The South is neither 
politically nor economically ready for separation, he asserted, and 
pointed to the separation of Ethiopia and Eritrea, which he termed a 
disaster.  Most importantly, Abdulgadir said, South Sudan has no 
scenario for managing oil or other economic resources post 2011. 
 
--------------------------------------------- ---- 
Sudan Needs Technical Help from the United States 
--------------------------------------------- ---- 
 
¶6.  (SBU) He admitted that existing U.S. sanctions have had a 
negative impact on Sudan's oil sector; they have forced Sudan to 
become overly dependent on the services of Chinese companies, that 
do not operate at the same high technical levels as do U.S. 
companies.  He noted that oil marketing is also restricted; Japan 
and Korea do not buy oil from Sudan because of U.S. sanctions. 
Abdulgadir concluded that technological expertise is needed to 
enhance oil recovery from Sudan's reserves, and to improve oil 
refining. 
 
¶7. (SBU) Comment: Many of Abdulgadir's comments appeared to be based 
on personal opinions, with a Northern bias, but he was candid on 
several points.  His admission that Sudan's oil reserves will be 
exhausted in 16 years was surprisingly frank for a GNU minister. 
For the record, the AEC has an advisory mandate but no enforcement 
authority. 
 
WHITEHEAD