US embassy cable - 04KUWAIT4389

C O N F I D E N T I A L KUWAIT 004389 
 
SIPDIS 
 
STATE FOR NEA/ARPI, EB/ESC FOR GALLOGLY 
 
E.O. 12958: DECL: 12/18/2014 
TAGS: EPET, ENRG, PREL, KU, CH, IT 
SUBJECT: CHINA AND ITALY TO STORE KUWAIT'S STRATEGIC 
RESERVE; GOK SEEKS THIRD LOCATION 
 
 
Classified By: Ambassador Richard LeBaron for reasons 1.4 (b) and (d) 
 
1. (C) A senior advisor to Prime Minister Shaykh Sabah 
Al-Ahmed Al-Sabah told Poloff on December 15 that Kuwait had 
concluded an agreement with China -- reportedly through a 
China-based Chevron subsidiary -- for the storage of part of 
its foreign-based "Strategic Petroleum Reserve," (SPR) 
bolstering apparently existing storage capacity in Italy.  He 
said the GOK was "looking for a third location" and was 
considering the possibility of approaching the United States 
about storing part of the SPR in Alaska. The advisor said the 
PM may raise the issue during his planned January or February 
visit to the U.S. (Note: The advisor added that a formal 
visit request will be forthcoming shortly.  End Note.) 
 
2. (C) The advisor was unable to provide numbers on the size 
of the reserve, but said it was created by PM Shaykh Sabah as 
a buffer to potential supply disruptions "should there be any 
problems in the Straits of Hormuz." 
 
3. (C) Comment: Kuwait maintains a domestic SPR, but this is 
the most detailed description of a foreign-based SPR that 
post has been privy to to date.  The decision to store part 
of the reserves in China makes both strategic and economic 
sense; the PM has repeatedly stated his intent to realign 
Kuwait's economy towards Asia, where demand for petroleum 
products is expected to grow exponentially and indefinitely. 
LEBARON