US embassy cable - 04ABUDHABI2033

C O N F I D E N T I A L ABU DHABI 002033 
 
SIPDIS 
 
NOFORN 
 
E.O. 12958: DECL 06/21/08 
TAGS: EPET, PGOV, BEXP, ENRG, ECON, EINV, TC, IR 
SUBJECT:  UAEG DECLINES TO PROVIDE FURTHER INFO ON GAS 
NEGOTIATIONS WITH IRAN 
 
REFS: ABU DHABI 1540 AND PREVIOUS 
 
1.  (U) Classified by Charge d'Affaires, a.i. Richard A. 
Albright, for reasons 1.5 (B) and (D). 
 
2.  (C/NF) In a June 14 meeting with Econoff, Chief 
Operating Officer of Mubadala (and former Projects Manager 
for UAE Offsets Group) Khaldoon Al-Mubarak (protect) said 
the UAEG would not provide further details about its 
negotiations with Tehran for the supply of gas to the UAE 
(refs) because of the possible negative repercussions such 
discussions could have on the project.  He said that a 
decision to conclude a gas supply agreement with Tehran 
would be part of a broader effort to normalize UAE-Iranian 
relations -- including a resolution to the long-standing 
issue of the disputed islands of the Greater and Lesser 
Tunbs and Abu Musa. 
 
3.  (C/NF) When asked if the UAE's preliminary discussions 
with Tehran about the supply of gas indicated that Iran is 
less of a security threat to the UAE than in years past, 
Al-Mubarak responded that he was unsure about the senior 
UAE leadership's perception of Tehran.  "Some days they're 
concerned, other days it's no big deal."  He noted that the 
younger generation of leaders certainly is less concerned 
about Iran as an existential threat, and perceive internal 
security and terrorism as the priority for the UAEG. 
Although Al-Mubarak declined to name the "younger 
generation" of leaders, he noted that his boss Shaykh 
Mohammed bin Zayed Al-Nahyan (MbZ) was "very progressive" 
in his views toward Iran.  He noted that not a single U.S. 
policymaker asked MbZ about the possible Iranian gas deal 
during his recent trip to Washington - "clearly [U.S. 
policymakers] are less concerned about our discussions with 
Iran than the U.S. Embassy [in Abu Dhabi]." 
 
4.  (C/NF) Speaking generally, Al-Mubarak said that the 
price of Qatari gas via the Dolphin project is competitive 
and Iranian cost of production higher because of U.S. 
sanctions against Tehran.  He suggested, however, that Iran 
is eager to make political and economic inroads with the 
Gulf countries and would be willing to take a loss 
initially to undercut Qatar and conclude gas supply 
agreements with Kuwait, UAE and others.  Al-Mubarak also 
said that the Gulf countries likewise were looking to 
diversify sources of gas and not rely entirely on Qatar. 
Al-Mubarak said that Iran's probable source of gas to the 
Arabian Gulf would be the South Pars field. 
 
5.  (C/NF) Comment: The UAEG is weighing carefully the 
political repercussions of a gas deal with Tehran, and 
balancing those concerns with the UAE's critical future 
energy requirements.  If the UAEG intends to predicate the 
gas agreement with Iran on resolution of the disputed 
islands, it could be a very long time before such an 
agreement is reached.  On the other hand, a gas deal could 
be a first step toward an eventual resolution of the 
islands dispute within the context of warming relations. 
Such a position would allow UAE companies to move forward 
with their plans to import Iranian gas.  End comment. 
 
6.  (U) This cable was coordinated with Congen Dubai. 
 
Albright