US embassy cable - 05KUWAIT2802

UNCLAS SECTION 01 OF 02 KUWAIT 002802 
 
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SENSITIVE 
 
DOE PLEASE PASS TO MWILLIAMSON AND JBRODMAN 
 
E.O. 12958: N/A 
TAGS: EINV, EPET, KU, PREL, OIL SECTOR 
SUBJECT: DOE WILLIAMSON DELEGATION VISITS KUWAIT 
 
REF: A. KUWAIT 02573 
     B. STATE 107945 
 
1.  (U) Summary.  DOE officials Williamson and Brodman met 
on 21 June with Minister of Energy Shaykh Ahmed and other 
senior GOK energy officials.  The delegation delivered a 
letter from Secretary Bodman inviting Shaykh Ahmed to 
meet with him in Washington and expressing the Secretary's 
interest in visiting Kuwait soon.  The delegation, 
accompanied by Ambassador, also briefed GOK interlocutors 
on their Secretary's recent foreign travel; outlined the 
proposed U.S. energy bill; clarified the Administration's 
position on the so-called "NOPEC" amendment; and discussed 
developments regarding mega energy projects Al-Zour North 
and Project Kuwait, of major interest to U.S. firms.  GOK 
officials were sanguine about prospects for early closure 
on these energy projects.  This evaluation was not shared 
by senior executives from nine major energy and engineering 
firms attending a luncheon hosted by Ambassador in honor 
of the DOE team.  End Summary. 
 
2.  (U) Department of Energy Senior Foreign Policy Advisor 
Molly Williamson and Deputy Assistant Secretary for 
International Energy Policy John Brodman met on 21 June in 
Kuwait with Minister of Energy H.E. Shaykh Ahmed Fahd Al- 
Ahmad Al-Sabah, Ministry of Energy Assistant 
Undersecretary for Planning Yousif Mohammad Al-Hajeri, 
Kuwait Petroleum Company (KPC) Managing Director for 
Marketing Jamal Al-Nouri, and Chairman of Altanmia Oil 
Development Company Ahmad Al-Arbeed.   Ambassador LeBaron 
joined for the KPC and Minister meetings and hosted a 
luncheon at his residence attended by nine energy and 
engineering industry representatives with operations in 
Kuwait.  Firms represented included ExxonMobil, Chevron, 
Parsons Brinckerhoff and Engineering, Fluor, Halliburton, 
Equate and Saudi Arabian Texaco. 
 
3.  (U) At each of the GOK meetings, Ms. Williamson and 
Mr. Brodman raised the Project Kuwait development program 
for the northern oil fields and the Al Zour North 
electrical power generation project.  Kuwaiti 
interlocutors were uniformly optimistic about prospects 
for these proposals although the projects' timetables 
continue to slip somewhat. 
 
4.  (SBU) Both Energy Minister Shaykh Ahmed and Mr. Ahmad 
Al-Arbeed -- head of the newly established Altanmia Oil 
Development Company, created as the interface between the 
GOK and the international oil companies (IOCs) -- thought 
it unlikely that Project Kuwait legislation would receive 
full parliamentary approval this term.  The government- 
backed proposal for Project Kuwait was passed unanimously 
by the Economic and Financial Affairs Committee on 8 June 
and now is ready for consideration by the full legislature. 
However, the National Assembly is scheduled to close on 
28 June to reconvene in mid October.  Given this, our 
interlocutors laid out the following timeline for Project 
Kuwait: the National Assembly reconvenes in mid October 
with endorsement of the GOK proposals expected by mid 
November, with a special session of the Assembly, if 
required; the actual tendering process will take another 
six to nine months; the contract could be let by June 
2006; the IOCs' assumption of responsibilities would 
commence soon thereafter. 
 
5.  (SBU) As for the Al Zour North power production 
project, Minister of Energy Shaykh Ahmed and Undersecretary 
for Planning Yousif Mohammad Al-Hajeri reported that GOK 
legal experts are reviewing the pre-qualification tender 
document and clarifying specifications based on 
recommendations from the concerned consortia.  They 
predicted this timeline for the process: legal review and 
the selection of a short list of perhaps five pre- 
qualified bidders completed by September 2005; tendering 
process to take another six to nine months with the 
primary contractor selected by the summer of 2006, with 
construction to start then.  Shaykh Ahmed noted that he 
had met with a group of U.S. firms recently and he had 
the impression that they had left the meeting satisfied 
with the answers provided to their concerns about certain 
terms and conditions of the project.  (Note: Industry 
sources are considerably less sanguine about the 
timelines for Al-Zour North and Project Kuwait. At the 
Ambassador's luncheon, energy firm representatives 
uniformly described the GOK's timetables as unrealistic 
and unachievable based on their past experience with the 
Ministry of Energy and major projects.  Consensus opinion 
was that it could be well into 2007 before either project 
would be initiated on the ground.  End note.) 
 
6.  (SBU) Senior Advisor Williamson delivered a personal 
letter to Shaykh Ahmed from Secretary of Energy Samuel 
Bodman.  The Minister was genuinely pleased to receive 
this communication and the invitation to dine with the 
Secretary during Shaykh Ahmed's 29 June - 1 July visit to 
 
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Washington as a member of the delegation accompanying 
Prime Minister H.H. Shaykh Sabah Al-Ahmad Al-Jaber Al- 
Sabah.  Scheduling of that meeting will be clarified as 
the delegation's travel schedule develops, although it 
appears that a lunch on the 29th, as proposed by DOE, may 
not be possible for the Energy Minister.  Shaykh Ahmed 
received warmly the news that Secretary Bodman hopes to 
visit Kuwait before the end of 2005; he extended an early 
welcome in anticipation of that event.  Ms. Williamson and 
Mr. Brodman also briefed Shaykh Ahmed in some detail on 
Secretary Bodman's thoughts developed during his recent 
 
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trip to Moscow, Baku and Kiev.  Also discussed was the 
Secretary's opening of the U.S.-Indian Energy Dialogue 
 
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with Indian co-chair Montek Ahluwalia.  Ms. Williamson 
further briefed Shaykh Ahmed on the pending U.S. energy 
bill, sharing with him background on the bill's provisions 
and the Administration's expectations for what it will 
accomplish.  Ms. Williamson explained the Administration's 
position on the so-called "NOPEC" amendment, which the 
Minister had heard about and was satisfied with our 
explanation and belief that the amendment would not 
survive markup. 
LEBARON