US embassy cable - 04ABUDHABI2254

C O N F I D E N T I A L SECTION 01 OF 03 ABU DHABI 002254 
 
SIPDIS 
 
NOFORN 
 
STATE FOR E, EB/ESC/ESP, INR/EC, INR/B, NEA/ARP AND NEA/RA 
COMMERCE FOR 1000/OC/ 
COMMERCE FOR 4520/ITA/IEP/ONE 
COMMERCE FOR 4530/ITA/MAC/OME/DGUGLIELMI, 
4500/ITA/MAC/DAS 
3131/CS/OIO/ANESA 
USDOE FOR OFFICE OF THE SECRETARY  HONDA HUDOME 
 
E.O. 12958: DECL: 07/06/09 
TAGS: ECON, EFIN, EINV, EPET, PINS, PREL, PGOV, TC 
SUBJECT: UAE: MAJOR SHAKE-UP IN THE SUPREME PETROLEUM 
COUNCIL 
 
REF: A) 02 ABU DHABI 1415 
 
     B) ABU DHABI 735 
     C) ABU DHABI 1197 
     D) ABU DHABI 13 
 
1.  (U) Classified by Charge d'Affaires, a.i. Richard A. 
Albright, for reasons 1.5 (b) and (d). 
 
2.  (C/NF) Summary and comment: In a surprise move, Abu 
Dhabi Crown Prince Shaykh Khalifa bin Zayed Al-Nahyan 
overhauled the membership of the secretive Supreme 
Petroleum Council (SPC) on June 29.  Long-time advisers to 
UAE President Zayed and aging royal family members were 
ousted and replaced by younger, Western-educated 
technocrats and National Oil Company (ADNOC) heavyweights. 
Although Khalifa presides over the SPC (and local press 
reported that Khalifa initiated the reorganization), it is 
probable that the more progressive UAE Armed Forces Chief 
of Staff and Abu Dhabi Deputy Crown Prince Shaykh Mohammed 
bin Zayed (MbZ) orchestrated the membership change. 
 
3.  (C/NF) The SPC is an exclusive organization that 
determines Abu Dhabi's oil policy (ref A).  It is the SPC, 
not the Petroleum Ministry, which oversees ADNOC and 
determines Abu Dhabi's position on OPEC issues.  The SPC 
also makes decisions about international oil company 
participation in major oil projects within the emirate, and 
most recently delayed a controversial decision to award an 
equity stake in the mammoth Upper Zakum offshore oil field 
to ExxonMobil, BP, or Shell (ref B).  The new SPC members 
are favorably disposed to the United States, and we're 
confident that U.S. oil companies will benefit from the 
organization's reform.  We assess that this is a 
continuation of many expected personnel changes leading to 
the rejuvenation and modernization of local and federal 
government institutions, including the Abu Dhabi Executive 
Council, the federal Cabinet and the Federal National 
Council (ref C).  End summary and comment. 
 
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Who's In 
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4.  (C) The new membership of the SPC indicates that CP 
Khalifa and Deputy CP Mohammed are consolidating their 
power, and replacing their father's long time advisers with 
trusted technocrats and other competent, Western-educated 
sons of Shaykh Zayed.  Shaykh Khalifa reappointed his half 
brothers, MbZ and UAE Deputy Prime Minister Shaykh Sultan 
bin Zayed Al-Nahyan to the SPC.  Although the latter plays 
a marginal role in Abu Dhabi politics these days, Shaykh 
Khalifa probably retained Sultan out of respect for his 
title and senior position within the ruling family. 
 
5.  (C) Shaykh Khalifa also kept his trusted adviser, 
Mohammed Habroush Al-Suweidi, who is enormously respected, 
incorruptible, and while semi-reclusive, plays a key 
behind-the-scenes-role in almost all of Abu Dhabi's main 
financial institutions.  Al-Suweidi's protege, ADNOC Board 
Member Jua'an Salem Al-Dhaheri and Abu Dhabi Investment 
Authority (ADIA) Board Member Khalifa Mohammed Khalifa Al- 
Kindi also remain on the SPC and have considerable 
experience in Abu Dhabi's oil sector. 
 
6.  (C) New appointees to the SPC include up-and-comer 
Shaykh Hamed bin Zayed Al-Nahyan -- a young, dynamic and 
Western educated son of UAE President Zayed from the Bani 
Muza line and Chairman of the Abu Dhabi Economic 
Department.  He also sits on the powerful Abu Dhabi 
Executive Council, and a number of American businessmen 
here say that Hamed is a progressive thinker who has 
supported Abu Dhabi's efforts to privatize and reform its 
quasi-governmental commercial holdings. 
 
7.  (C) Shaykh Mansour bin Zayed Al-Nahyan, a relatively 
young son (b. 1970) of UAE President Zayed and UAE First 
Lady Fatima bint Mubarak, also was appointed to the SPC. 
Mansour is the Director of the President's Office and the 
relatively new Chairman of the International Petroleum 
Investment Company (IPIC).  Although he has some experience 
managing Abu Dhabi's oil investments, Mansour probably owes 
his new SPC position to the fact that he is a Bani Fatima 
and a powerful palace insider. 
8.  (C) One of the more surprising new appointments to the 
SPC is ADNOC's Deputy CEO and Director of the Exploration 
and Production Department Abdullah Nasser Al-Suweidi, who 
plays an integral role in the supervision of Abu Dhabi's 
overall oil production (bio notes in ref D).  He is by far 
the lowest ranking member of the SPC, but a highly 
respected technocrat and heavyweight within the ADNOC 
hierarchy.  Abdullah oversees all onshore and offshore 
exploration and development in the emirate, and manages 
three joint venture operations: Abu Dhabi Company for 
Onshore Operations (ADCO), Abu Dhabi Marine Operations 
Company (ADMA-OPCO), and Zakum Development Company (ZADCO), 
and ADNOC's sole risk concessions.  He worked his way 
through the ranks of the national oil company, having 
previously served as ADNOC's Director of the Planning and 
Coordination Department, the Industrial Projects Division, 
and chaired another ADNOC subsidiary company, the Abu Dhabi 
Gas Liquefication Company (ADGAS).  Abdullah is U.S.- 
educated, well informed and has been the key supervisor of 
the Upper Zakum bidding process.  His brother is the 
Governor of the UAE central Bank. 
 
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Who's Out 
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9.  (C/NF) The elimination of several ruling family members 
with honorary positions on the SPC and tribal ties to 
President Zayed, or businessmen shaykhs with long-standing 
connections to the ruling family is notable.  There's been 
no mention of these men in the local press, and it's 
unclear whether they were forcibly retired or demoted to 
some lesser consultative role.  The UAE's first Oil 
Minister, Dr. Mana'a Saeed Al-Otaiba served for many years 
as a personal adviser to Shaykh Zayed, but seems to have 
fallen out of favor with most of the leading shaykhs in 
recent years.  UAE Deputy Prime Minister Shaykh Hamdan bin 
Zayed has told the Ambassador that Al-Otaiba often makes 
bold initiatives without first consulting with the relevant 
players. 
 
10.  (C) Undersecretary of Shaykh Khalifa's Diwan, Ali bin 
Ahmed Al-Dhaheri, also was eliminated from the SPC.  There 
recently have been indications that Al-Dhaheri's influence 
with Shaykh Khalifa had declined; he owed his position on 
the SPC as much to friendship and loyalty as to any innate 
ability or expertise.  Al-Dhaheri also is the Secretary- 
General of the Abu Dhabi Executive Council, but we have no 
information suggesting that he has been stripped of his 
other positions. 
 
11.  (C) ADIA Director Mohammed Eid Al-Muraikhi, and 
Shaykhs Tahnoun bin Mohammed Al-Nahyan and Suroor bin 
Mohammed Al-Nahyan were ousted from the SPC.  In past 
conversations with the Ambassador, they had seemed 
relatively uninformed about the SPC's agenda or relevant 
oil issues.  Tahnoun's elimination is significant because 
of his senior position within the ruling family; he is 
Shaykh Zayed's highly respected but only informally 
schooled representative in the emirate's Eastern Region 
(i.e., Governor of Al-Ain).  Suroor holds the largely 
ceremonial position of Chamberlain of the Presidential 
Court, but has largely divorced himself from governmental 
responsibilities in recent years.  These older and less- 
educated shaykhs also may have been unduly influenced by 
what was heard on the majlis circuit -- which often is 
intended to influence as much as inform -- and relied less 
on the expertise of ADNOC to evaluate multi-million dollar 
petroleum projects. 
 
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Good News For U.S. Companies 
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12.  (C/NF) The former SPC membership was based more on 
traditional tribal connections rather than acumen or 
expertise -- the SPC had no economists, policy planners, 
lawyers and almost no formal staff at all.  The new 
membership represents the best and brightest that Abu 
Dhabi's oil sector has to offer.  These former and current 
ADNOC leaders and assembles a group of men are favorably 
disposed to the United States -- they are our key 
interlocutors on oil issues, are Western educated, have 
children studying in the United States, and travel to the 
U.S. frequently for business and leisure. 
 
13.  (C/NF) The shake-up in SPC membership appears likely 
to confirm what MbZ told the Ambassador earlier this year - 
- the SPC intends to award a 28 percent stake of the Zakum 
Development Company (ZADCO) to U.S. company ExxonMobil. 
The change in SPC membership may, in fact, have been an 
effort to build consensus for the U.S. oil giant's bid. 
The SPC's delay in making a final decision on the Zakum 
project in January indicated division among the SPC 
membership.  In the absence of consensus for a single 
company, the SPC short listed three companies (ExxonMobil, 
BP and Shell) for the project and directed ADNOC to seek 
"further clarification" of these select bids. 
 
14.  (C/NF) In January, it was clear that ExxonMobil was 
the favorite of ADNOC, and ADNOC CEO Yousef bin Omeir had 
convinced Shaykh Khalifa to support the ExxonMobil bid.  In 
meetings with the Ambassador, both MbZ and Mohammed 
Habroush Al-Suweidi intimated that they, too, favored 
ExxonMobil's bid.  Chamberlain of the President's Court 
Shaykh Suroor bin Mohammed, however, was a known advocate 
for BP, and may have voiced his opposition to Exxon.  Also 
in meetings with the Ambassador, Shaykh Tahnoon bin 
Mohammed seemed uninformed about Upper Zakum.  In the 
coming months, the new SPC membership of current and former 
ADNOC technocrats could well support unanimously Exxon's 
bid for the Upper Zakum project. 
 
Albright