US embassy cable - 03KUWAIT5756

C O N F I D E N T I A L KUWAIT 005756 
 
SIPDIS 
 
STATE FOR NEA/ARP, NEA/NGA 
COMMERCE FOR OIO/ANESA 
 
E.O. 12958: DECL: 12/17/2013 
TAGS: EPET, ENRG, ETRD, PREL, KU, SA, QA, IR 
SUBJECT: (C) GOK STILL AWAITING QATARI GAS; UNLIKELY TO 
SOURCE FROM IRAN 
 
Classified By: CDA John G. Moran for reasons 1.4 (b) and (d) 
 
1. (C) Summary: Despite increased publicity surrounding a 
possible Kuwaiti-Iranian natural gas deal, the GOK is 
unlikely to conclude an agreement with Iran, according to a 
well-placed Kuwait Petroleum Company (KPC) official.  Rather, 
Kuwait is betting that Qatar will eventually serve as its 
primary source of natural gas, once a stalled agreement with 
that country begins moving again.  End Summary. 
 
2. (C) During a December 16 meeting with Poloff, Kuwait 
Petroleum Company Washington Office Director and former KPC 
Legal Counselor Shaykh Nawaf Saud Nasser Al-Sabah said it was 
extremely unlikely that Kuwait would conclude any agreement 
with the Government of Iran for badly needed natural gas. 
Shaykh Nawaf, who was on the negotiating team that visited 
Iran for initial talks on a possible deal in 2002, said the 
GOK is unwilling to commit itself to any agreement with Iran 
that does not involve a third party, due to political 
concerns; Iran has consistently refused to accept such an 
offer.  Shaykh Nawaf said the government remains hopeful that 
an agreement with Qatar, which would provide 1 billion cubic 
feet of gas per day, but has been on hold since the fall of 
2002, would move forward shortly. 
 
3. (C) Shaykh Nawaf said KPC and the Qatari government had 
agreed to terms to start transferring Qatari gas in 2002, but 
ran into "political problems" when the Saudi government 
refused to allow the required pipeline to run through its 
territory.  In this context, Shaykh Nawaf reminded Poloff 
that Saudi Arabia and Qatar have been involved in a bitter 
dispute over what the Saudis claim is anti-Saudi reporting by 
the Qatari-based Al-Jazeera cable network.  He said the 
Qataris had approached Kuwait in an effort to get the GOK to 
lobby the Saudis, but the GOK had refused to do so, not 
wanting to appear to support Qatar in the standing 
Saudi-Qatari dispute. 
 
4. (C) Shaykh Nawaf said Saudi Foreign Minister Prince Saud 
al-Faisal told then-FM (now PM) Shaykh Sabah Al-Ahmed 
Al-Sabah during a 2002 visit to Riyadh that the Saudi 
government "will never agree to the (natural gas) agreement 
as long as Qatar is involved."  Despite this statement, 
Shaykh Nawaf predicted that Saudi Arabia would eventually 
allow the agreement.  "They cannot block it forever," he said. 
 
5. (C) In an attempt to clear things up, said Shaykh Nawaf, 
PM Shaykh Sabah Al-Ahmed raised the issue of the gas deal in 
the presence of Saudi Crown Prince Abdullah and Qatari senior 
leadership.  Although CP Abdullah verbally agreed that there 
was "no problem," according to Shaykh Nawaf, the SARG "would 
not return phonecalls" of Qatari officials hoping to reach a 
breakthrough with Saudi Arabia. 
 
6. (C) Shaykh Nawaf said that ExxonMobil executives hoping to 
push the deal forward had recently contacted FM Shaykh Dr. 
Mohammed Al-Sabah and asked him to approach his Saudi 
counterpart on the issue.  The executives claimed the SARG 
had agreed to stop blocking the deal if Dr. Mohammed would 
come appeal to them in person.  Dr. Mohammed declined his 
support, according to Nawaf, who remarked "the FM would not 
be dictated to by (ExxonMobil)." 
 
7. (C) Shaykh Nawaf said the possible Iranian deal was never 
meant to serve as the primary source for Kuwait gas, which is 
needed to fuel power generation in the country.  Rather, he 
said, the Iranian gas was meant to complement the supply from 
Qatar.  However, if the situation remains as is, Kuwait may 
be forced to accept an Iranian deal. 
 
8. (C) Comment: With power supplies reaching their limits and 
rumors of possible brownouts next summer, Kuwait is 
scrambling to construct power plants.  Given this state of 
affairs, one would expect the GOK to take a more proactive 
stance vis-a-vis Iranian gas.  The fact they are not reflects 
their distrust of the Iranian regime, and their confidence 
that Saudi Arabia will eventually give in. 
MORAN