US embassy cable - 05MANAMA692

C O N F I D E N T I A L MANAMA 000692 
 
SIPDIS 
 
E.O. 12958: DECL: 05/11/2015 
TAGS: ENRG, EPET, ETTC, PBTS, BA 
SUBJECT: QATAR REPORTEDLY AGREES ON NATURAL GAS PIPELINE TO 
BAHRAIN 
 
REF: STATE 83661 
 
Classified By: Classified by Ambassador William T. Monroe for reasons 
1.4 (b) and (d). 
 
1.  (U) The Bahrain press, quoting unnamed sources, reported 
May 5 that, after months of discussions, Qatar has agreed to 
supply Bahrain with natural gas via pipeline.  One press 
source reported that the framework agreement called for 
expected imports of 500-1,000 million cubic feet per day over 
a 25-year period. 
 
2.  (C) Crown Prince Salman Al-Khalifa heads the Bahraini 
side in the discussions on the gas project.  At the end of 
NEA PDAS Cheney's May 10 meeting with the Crown Prince, the 
Ambassador asked about the gas deal.  Shaykh Salman confirmed 
that agreement has been reached to proceed with the project, 
and termed this a significant development.  At the same time, 
he said that the actual contract to construct the pipeline 
has not been signed.  He said that he expected the pipeline 
would become operational within 2-3 years.  When pressed for 
details on the company or companies involved, he said that 
would be up to the Qataris to decide. 
 
3.  (C) The Ambassador met with Minister of Oil Shaikh Isa 
bin Ali Al Khalifa May 11 to deliver reftel points on Kuwait 
gas options and ILSA concerns, and to ask if the positive 
news on Qatar-Bahrain pipeline might give a boost to the 
Qatar-Kuwait pipeline.  Al Khalifa said Bahrain and the U.S. 
are like-minded on the question of importing gas from Iran, 
and said that the GOB is supportive of a pipeline from Qatar 
to Kuwait passing through Bahraini waters.  While not 
directly involved in the Qatar-Bahrain pipeline discussions, 
he said that he thought the Qatar-Kuwait pipeline could be a 
separate pipeline or could be an extension of the 
Qatar-Bahrain pipeline.  He guessed that Kuwait negotiations 
with Iran might be simply a tactic to put pressure on the 
Qataris, similar to what the GOB had done in the past.  The 
Ambassador asked that the GOB encourage development of the 
Qatar-Kuwait pipeline. 
 
4.  (C) The Ambassador asked Shaikh Isa if there had been any 
progress in efforts to restore the 50,000 barrel per day 
Saudi oil grant to Bahrain that expired in mid-2004.  The 
Minister said Saudi Arabia had still not responded to the 
GOB's request to restore the grant, but that current high oil 
prices were compensating for the loss.  Shaikh Isa also noted 
that Bahrain had originally requested to purchase natural gas 
from Saudi Arabia but, according to the Saudis, they did have 
any excess gas for sale. 
 
5.  (C) Comment: We defer to Embassy Qatar on exactly how 
imminent construction of the Qatar-Bahrain pipeline is, but 
the government of Bahrain is treating this new "agreement" as 
an important step forward.  The gas is badly needed if 
Bahrain is to meet its industrial development ambitions, most 
notably further expansion of the Alba aluminum facility and 
other projects requiring significant energy input. 
MONROE