US embassy cable - 03KUWAIT5454

C O N F I D E N T I A L SECTION 01 OF 02 KUWAIT 005454 
 
SIPDIS 
 
STATE FOR NEA/FO, NEA/ARP, NEA/NGA, EB/ESC, EB/ESC/IEC 
STATE FOR EB/ESC/IEC/EPC, EB/TPP/BTA/ANA 
NSC FOR THEROUX 
 
E.O. 12958: DECL: 12/02/2013 
TAGS: ETRD, EAID, EPET, PREL, PGOV, MOPS, KU, IZ 
SUBJECT: (U) IRAQ: KUWAIT WANTS TO INCREASE "HUMANITARIAN 
FUEL" DELIVEREIS TO IRAQ, NEEDS DETAILS ON QUANTITIES 
 
Classified By: Charge d'Affaires Frank C. Urbancic, Reasons 
1.4 (b) and (d) 
 
1.  (C) SUMMARY.  Officials from Altanmia, the Kuwaiti 
consortium transporting humanitarian fuel to Iraq under 
contract to KBR, have told CPA and KBR representatives that 
they are willing and able to deliver more fuel to Iraq, and 
that the GOK considers this a high priority.  Increases in 
most fuel types can be made immediately up to 4 million 
liters/day of gasoline and 9 million liters/day total, 
including diesel and kerosene.  Further increases can be made 
following some technical modifications, all of which would be 
paid for by Altanmia but would be economical only if demand 
stays high in the medium term. However, the Kuwaitis need a 
clear idea of what quantities and types of fuel Iraq 
requires, and for how long.  CPA/KBR did not have specific 
figures for the Kuwaitis as of December 1, although KBR 
representative Stoney Cox said that he would obtain them by 
December 5.  CPA Senior Advisor to the Oil Minister Rob McKee 
stressed the urgency of this operation, with only 2-6 days' 
worth of stocks in Iraq and winter approaching.  It is 
apparent that the GOK has told Altanmia to do whatever is 
necessary to avoid a hydrocarbon shortage in Iraq.  Altanmia 
is awaiting instructions from the US on what fuels are needed 
and at what volume.  If hydrocarbons are needed in Iraq, the 
GOK is ready to meet the requirement, but somebody has to ask 
them.  END SUMMARY. 
 
 
2.  (C) On December 1, CPA's Senior Adviser to the Oil 
Minister Rob McKee and Kellogg Brown and Root's (KBR) Stoney 
Cox met in Kuwait with representatives of Altanmia, the 
Kuwaiti company responsible for transporting humanitarian 
fuels to Iraq; A/DCM and EconOff (notetaker) sat in.  The 
meeting followed an earlier visit by McKee and two other CPA 
officials, who met with Altanmia, GOK officials and the head 
of Kuwait Petroleum Corporation (KPC) on November 24.  At 
both meetings, the participants discussed Kuwait's provision 
of humanitarian fuel aid to Iraq and difficulties that have 
prevented Kuwait from supplying greater quantities. 
According to Altanmia's Waleed Al-Humaidhi, one of the major 
obstacles they have faced thus far has been KBR's inability 
to determine the actual need, which prevents Altanmia from 
planning to fill it.  He also noted that the turnaround time 
for trucks in Iraq was very inefficient, with trucks waiting 
for days for convoys to return to Kuwait.  He asserted that 
security was the main bottleneck. 
 
3.  (C) At the December 1 meeting, McKee informed Altanmia 
that he had been successful in reducing some of the 
logistical impediments (including securing a commitment to 
run more convoys each day).  He also indicated that the USG 
would like to take advantage of Kuwait's spare capacity to 
supply Iraq with a greater volume of fuel.  McKee said that 
Iraq was facing a crisis as winter approached and stocks 
dwindled to 2-5 days' worth of fuel.  However, neither McKee 
nor Cox provided the Kuwaitis with specific information about 
the quantity or types of fuel that they were seeking.  Cox 
said that he hoped to have this information by December 5. 
 
4.  (C) Altanmia told Cox and McKee that ramping up to 
provide additional fuel would not be a problem.  Al-Humaidhi 
specified the following volumes available for each product: 
 
-- Kerosene:  Kuwait can load 1.7 million liters/day of 
kerosene within 72 hours.  Supply can be further increased if 
the US military allows Altanmia to use two pipelines that run 
through air bases used by the US.  These pipelines are 
currently being used by the US military at only 25-30% 
capacity.  If the US military agrees, KPC will pay to install 
gauges and meters, and establish separate filling pumps for 
Altanmia.  Alternatively, Al-Humaidhi proposed that the US 
military could use  the line at Ali al-Salem airbase, with 
Altanmia using the other at Ahmed al-Jaber airbase, currently 
not in use by the US.  Cox said he would ask the military if 
Altanmia can use the 75% of capacity that is going unused. 
 
-- Mogas (aka benzene, aka gasoline):  Altanmia can provide 
up to 9 million liters/day of mogas, but not immediately. 
Although there are sufficient vehicles to transport the fuel, 
there is insufficient local storage space that could be used 
if production outpaces deliveries.  Altanmia can lift up to 4 
million liters/day of benzene with no additional investment. 
With investments in containment vessels, Kuwait can increase 
benzene supplies to 9 million liters/day (Kuwait lifted up to 
15 million liters/day during the Iran-Iraq war). 
 
-- Diesel:  Altanmia can provide 1-1.5 million liters/day 
within 7-10 days (with some modifications needed, similar to 
those for kerosene deliveries).  They can ramp up to 4 
million liters/day within 2-3 weeks. 
 
5.  (C) Altanmia officials stressed that they need a clearer 
idea of Iraq's longer term fuel needs.  They asked whether 
Kuwait would simply be surging to meet shorter-term, seasonal 
supply shortfalls, or if the provision of humanitarian fuel 
supplies would be a longer, continuous operation. 
Al-Humaidhi underscored that the Kuwaitis are willing and 
able to do either.  If the US says that only a surge in 
production is needed for the winter months, Kuwait can can 
provide 5-7 million liters/day of mixed fuels within days, 
increasing to 9 million liters/day of mixed fuels within 
weeks.  If, on the other hand, the US projects that there 
will be a longer-term need, Altanmia will make several 
investments at their own expense.  Al-Humaidhi outlined 
Altanmia's tentative plans to revamp the abandoned Kazima 
loading depot, located near the Iraqi border.  The depot 
would be linked by pipeline to large-capacity storage barges 
offshore, which would solve the containment dilemma that 
Kuwait would face at higher production levels.  Al-Humaidhi 
said that the Prime Minister has indicated that fast-tracking 
approval of the Kazima renovation project within 48 hours 
could possibly be undertaken on an emergency basis, with 
further discussion.  The renovation can be completed within 
45-60 days using local contractors, or less with US military 
support.  Al-Humaidhi reiterated that Altanmia would make 
these investments at no/no cost to the US, and with no need 
for a US commitment on quantities of fuel to be delivered to 
Iraq.  However, Altanmia will not undertake such a large 
financial commitment if Iraq only needs increased fuel 
supplies for this winter.  Again, Al-Humaidhi emphasized that 
they simply need a clearer picture of what quantities and 
types of fuels are needed, so that they may make the 
necessary logistical arrangements.  He noted that the 
Government of Kuwait supports the US operation in Iraq "110 
percent."  GOK officials are perplexed that despite the GOK's 
willingness to do whatever it takes to get supplies into 
Iraq, the US continues to ignore this Kuwaiti offer, while 
purchasing fuel supplies from non-producing countries such as 
Jordan and Turkey. 
 
6.  (C)  COMMENT.  It is clear from both meetings that 
Altanmia is under firm orders from the highest levels of the 
GOK to provide Iraq with whatever fuel it needs.  Although 
hte volumes and time lines for provision of the several fuels 
shift slightly from one scenario to another, the intent is 
clear.  The overriding goal of the GOK is to ensure that 
there is no hydrocarbon shortage in Iraq, and the GOK 
believes Kuwait is best positioned to ease Iraq's fuel 
crisis.  However, Altanmia needs to know what quantities of 
each type of fuel are needed, and for how long.  Altanmia has 
already demonstrated its determination to make this work -- 
for example, Altanmia has absorbed penalties levied by the 
Kuwait Petroleum Corporation when KBR did not order the 
quantities of fuel it had indicated it would.  But it is 
imperative that CPA provide the Kuwaitis with a clear outline 
of quantities and types of fuel that Iraq needs, and an 
estimate of how long Iraq will require fuel exported from 
Kuwaiti, so that the Kuwaitis can increase fuel deliveries. 
END COMMENT. 
 
7.  (U) Mr. McKee did not clear this cable. 
 
8.  (U) Baghdad minimize considered. 
URBANCIC