US embassy cable - 05DOHA934

UNCLAS DOHA 000934 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: EPET, EINV, PREL, VE, BA, QA 
SUBJECT: NATURAL GAS UPDATE: BAHRAIN PIPELINE, VENEZUELA 
LINK, GAS-TO-LIQUIDS 
 
1. (SBU) Summary. A Ministry of Energy official told post 
that a natural gas pipeline to Bahrain announced in papers in 
Doha and Manama does not have much basis in reality. The 
official said that Venezuela had asked Qatar to participate 
in a project to supply LNG to the United States; the Qataris 
reportedly said that they would be interested if the project 
has commercial validity. Signed gas-to-liquids deals (with 
Shell and Exxon-Mobil) are going ahead, despite reports of 
postponement. End Summary. 
 
Bahrain Pipeline? 
----------------- 
 
2. (SBU) Senior Advisor to the Minister of Energy and 
Industry, Abdulla Salat, told P/E Chief May 25 that Qatar has 
no immediate plans to proceed with construction of a gas 
pipeline to Bahrain. What had been discussed was an 
arrangement to supply 400-800 million cubic feet of gas per 
day. The Bahrainis had requested favorable rates for the gas 
purchase, and had periodically suggested that they could buy 
Iranian gas or develop their own. So, the Qataris regarded 
the project as not particularly attractive since they could 
market the gas elsewhere for a better price, according to 
Salat. Thus, Qatar's gas that will be developed in the coming 
years will be designated for other projects. Salat described 
the newspaper articles as a political action to demonstrate 
sound relations between the countries. 
 
Gas-to-Liquids 
-------------- 
 
3. (SBU) Salat said that Qatar is experiencing strong demand 
for its gas, to the extent that current gas customers must 
compete for any increased shipments. Qatar is looking for the 
best price while taking into consideration risk factors. 
Salat explained that contrary to recent reports, 
gas-to-liquids (GTL) projects already signed will proceed. 
The signed projects are with Shell and Exxon-Mobil. Projects 
that had been under discussion will be put on hold. Salat 
said that this was because GTL had a higher risk associated 
with it, and Qatar could market its gas as LNG and sell to 
reliable customers at a good price with low risk. 
 
What's Happening to the Reserves 
-------------------------------- 
 
4. (SBU) A key element that emerged from the discussion was 
that Qatar has plenty of gas customers, and that gas coming 
on-line in the near term is fully allocated, including gas 
proposed for the pipeline to Kuwait. Salat mentioned 
expansion of the Dolphin project (a pipeline to the United 
Arab Emirates) as an example of how gas had been 
re-allocated. Note: Qatar may be holding back on overly rapid 
expansion of gas exploitation while it analyzes the reserves 
in the North Field, and how extraction is affecting the 
subsurface flow. End Note. 
 
Venezuela 
--------- 
 
5. (SBU) P/E Chief asked if there was an energy component to 
Qatar's relationship with Venezuela. (The Emir, Sheikh Hamad 
bin Khalifa Al Thani, met with President Chavez while in 
Brazil for the Arab-Latin America Summit, and Chavez visited 
Qatar earlier in the year.) Salat replied that the 
Venezuelans had invited the GOQ to invest in a project to 
supply LNG to the United States. The Qataris answered that 
they would be interested if the project is commercially 
viable. Salat did not believe anything would come of the 
idea. COMMENT: While a rapidly growing energy supplier, Qatar 
remains a small producer within OPEC. Political or economic 
interactions with Venezuela could be a way to raise its 
profile and test its political weight within the organization 
and in the larger world of energy. END COMMENT. 
UNTERMEYER