Cablegate: Chinese Oil Companies Not so Welcome in Nigeria's

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<<237579>>
12.02.2009 11:16
09ABUJA2170
Embassy Abuja
CONFIDENTIAL
09ABUJA2100
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RHMFISS/HQ USAFRICOM STUTTGART GE
TAGS: ECON EPET ENRG EINV PGOV PREL NI CH
SUBJECT: CHINESE OIL COMPANIES NOT SO WELCOME IN NIGERIA'S
REF: ABUJA 2100

C o n f i d e n t i a l section 01 of 03 abuja 002170

Sipdis

State pass to ustr (laurie-ann agama)
state pass to ustda (paul marin)
state pass to eximbank (j richter)
state pass to opic (barbara gibian, steve smith)
state pass to usaid - afr/sd (curtis, atwood, schlagenhauf)
state for eeb/isc/iec/enr (david henry)
state for s/ciea (david goldwyn, michael sullivan)
state for af/eps (elliot repco)
state for drl (tu dang)
usaid for dcha/dg (kimberly ludwig)
treasury for tony ieronimo, adam barcan
usdoe for george person, thomas sperl
doc for 3317/ita/oa/burress and 3130/usfc/oio/anesa/reed
labor for ilab (sudah haley)
johannesburg for ustda (jason nagy)

E.o. 12958: decl: 11/28/2019
Tags: econ, epet, enrg, einv, pgov, prel, ni, ch
Subject: chinese oil companies not so welcome in nigeria's
oil patch

Ref: abuja 2100

Classified By: Ambassador Robin R. Sanders for Reasons
in Sections 1.4 (b) and (d).

-------
summary
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1. (C) Two xxxxxxxxxxxx officials recently
volunteered that Chinese oil companies had made a lot of
mistakes in Nigeria and neither official welcomed their
presence. Nigeria National Petroleum Company (NNPC) xxxxxxxxxxxx
said on xxxxxxxxxxxx the NNPC
is aware of how the Chinese have behaved in the Sudan and
Chad and that the Chinese do not know how to deal with a
democratic government. xxxxxxxxxxxx complained on November 11 that there is no
recourse when dealing with the Chinese and that the Chinese
do not respect local laws. The poor image of the Chinese
helps to explain why they were never a serious threat to the
renewal of the international oil companies' (IOCs) oil mining
licenses (OMLs). END SUMMARY.

-------------------
ruffled feathers...
-------------------

2. (C) Nigeria National Petroleum Company (NNPC) xxxxxxxxxxxx
discussed the Chinese oil companies' recent attempts
to obtain deep water oil mining leases (OMLs) with Economic
Counselor and Trade and Investment Specialist on November 13.
xxxxxxxxxxxx said that Shell Nigeria had opened the door for the
Chinese by resisting GON efforts to pass the proposed
Petroleum Industry Bill (PIB) and telling the National
Assembly that the "Nigerian oil industry would be dead" if
the PIB passed. "So they brought in the Chinese," xxxxxxxxxxxx
said.

3. (C) Asked about how the Chinese handled themselves in
Nigeria, xxxxxxxxxxxx said, "the Chinese are very aggressive
because they need the oil." "They came in with big money,"
he said, "and they were ready with large loans with low
interest rates." But the Chinese also made some mistakes.
First, xxxxxxxxxxxx said, "We know what had happened in the Sudan
and Chad and we know enough about them to know where we want
them and where we don't." At the same time, xxxxxxxxxxxx said, "No
one really desires to see the IOCs go when we have worked
with them so long. Long-term friendships develop, a lot is
learned from them, and we know how they do business."

4. (C) Second, xxxxxxxxxxxx said, "Their oil companies are run by
the Chinese government and they do not know how to deal with
Qthe Chinese government and they do not know how to deal with
a democratic government. For example, the Chinese told the
NNPC officials which fields they wanted and the NNPC
officials had to say, 'No, this field is operated by
someone.'" The Chinese acted dumbfounded and said, "You mean

Abuja 00002170 002 of 003

we can't have it?" "The PIB did not come from nowhere,"
xxxxxxxxxxxx explained. Much consultation occurred before the GON
presented the PIB to the National Assembly and all that was
not going to be undone because of a Chinese official. "The
Chinese caused the problem," he summarized, "and they ruffled
a lot of feathers." xxxxxxxxxxxxadded that Gazprom of Russia had
used a similar approach. "We are lucky we have a democratic
government" he said, "Under the military, the Chinese and
Russians would be here."

----------------------------
...and no forwarding address
----------------------------

5. (C) xxxxxxxxxxxx colleagues also told visiting Coordinator for
International Energy Affairs (S/CIEA) David Goldwyn and his
delegation on November 11 that he and his union colleagues
did not want the Chinese in the Nigerian oil sector. Goldwyn
was asking about the problems faced by xxxxxxxxxxxx said,
"The Chinese are here and that is a huge
problem!" "xxxxxxxxxxxx have a list of the worst five countries to work
for," xxxxxxxxxxxx said, "and they are on that list." xxxxxxxxxxxx explained
that xxxxxxxxxxxx had experienced a problem with
ExxonMobil when they "wrongfully fired a worker." xxxxxxxxxxxx
applied pressure through the U.S. steel workers and the
worker in question was given a choice of being re-hired or
compensated and xxxxxxxxxxxx chose the latter. "If xxxxxxxxxxxx a problem
with a Chinese company," xxxxxxxxxxxx complained, "who can xxxxxxxxxxxx to?"
(COMMENT: Nigerian xxxxxxxxxxxx have complained to Labor
Officer that the Chinese do not have industrial relations
representatives or any formal human resources process other
than the immediate supervisor who does the hiring and firing.
Dealing with non-English-speaking Chinese officials also
hinders constructive interaction. END COMMENT).

6. (C) xxxxxxxxxxxx later elaborated by alleging that Chinese labor
practices were not good so no one wants to be part of it.
"Look at the Chinese mining companies in Zambia," xxxxxxxxxxxx said,
"the labor unions there had to chase them out." xxxxxxxxxxxx noted
that corrupt people in China were put to death, but overseas
they quickly adapt to the local environment, including
adopting corrupt practices. "The Chinese have no respect for
local laws," xxxxxxxxxxxx said, "and they compromise a lot of things,
including safety."

7. (C) Petroleum and Natural Gas Senior Staff Association of
Q7. (C) Petroleum and Natural Gas Senior Staff Association of
Nigeria (PENGASSAN) xxxxxxxxxxxx said the Chinese were the first to
bribe local officials to win contracts and get around local
laws. By contrast, xxxxxxxxxxxx said xxxxxxxxxxxx played by the
rules and was above-board. "xxxxxxxxxxxx proud of xxxxxxxxxxxx company in that
respect," xxxxxxxxxxxx said. (See reftel for additional background on
Goldwyn's meeting with the xxxxxxxxxxxx).

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comment
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Abuja 00002170 003 of 003

8. (C) The poor image of the Chinese helps to explain why
they never seriously threatened renewal of the IOCs' oil
mining licenses (OMLs), the first of which the GON signed
with ExxonMobil on November 20. Most of the remainder will
be signed in the coming weeks. Minister of State for
Petroleum Resources Odein Ajumogobia told the joint
GON-ExxonMobil press conference on the same day that, "There
was never any consideration of selling or trading one firm
for another." But he also said that, "NNPC has a right to
relinquish any part of its equity to any third party that
expresses interest and it is in that regard that the
discussions with the Chinese have been carrying on." The GON
owns 60 percent of all the joint ventures with the IOCs (55
percent in the case of Shell). So, the NNPC and the IOCs
could still end up having minority Chinese partners --
whether they like it or not.
9. (U) Embassy coordinated this telegram with ConGen Lagos.
Sanders

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