US embassy cable - 05KUWAIT4648

C O N F I D E N T I A L SECTION 01 OF 03 KUWAIT 004648 
 
SIPDIS 
 
SIPDIS 
 
LONDON FOR TSOU 
DEPARTMENT OF ENERGY FOR IE 
EB/ESC/IEC FOR GALLOGLY, DOWDY 
 
E.O. 12958: DECL: 11/01/2010 
TAGS: ENRG, EPET, ECON, KU, OIL SECTOR 
SUBJECT: COMMENTS FROM ENERGY MINISTER AND UNDERSECRETARY 
ON KUWAIT PROJECT, GAS SUPPLIES, NEW TECHNOLOGIES, ENERGY 
DIALOGUE AND COOPERATION WITH IRAQ 
 
REF: A. KUWAIT 3173 
     B. KUWAIT 0943 
 
Classified By: Ambassador Richard LeBaron for reason 1.4 (b) 
 
1.  (C) Summary:  During an October 30 meeting with the 
Ambassador, Energy Minister Shaykh Ahmad Fahd Al-Ahmad 
Al-Sabah told the Ambassador that prospects for a vote on the 
northern oilfields project were good for November or December 
and that he expected it to pass, echoing what Ministry of 
Energy Undersecretary Issa Al-Own told us the day before. 
Shaykh Ahmad also said that the prospects for an American 
firm's involvement in the upcoming Al-Zour power plant 
project were good. 
 
2.  (C) U/S Al-Own said that the GOK would be spending $100 
million to support research into new energy technologies, 
including the use of hydrocarbons in fuel cells.  He noted 
his pleasure with his recent visit to the U.S. and his 
meetings with Department of Energy counterparts, as well as 
his meeting with a possible private think tank partner for 
the new GCC Strategic Studies Center.  Al-Own mentioned that 
the last OPEC meeting of 2005 will be in Kuwait in December 
and will coincide with a OAPEC meeting at the same time.  The 
supply of gas for Kuwait's power and petrochemical plants 
still remained a concern for Al-Own, but he said that he saw 
progress on a small but promising cooperation agreement to 
import gas from Iraq, as well as Kuwait's ability to begin 
seismic surveying activity in the offshore Al-Durra gas 
field.  Neither Qatar nor Iran appeared to be promising 
sources of gas in the near-term, according to Al-Own. 
Finally, he said that a joint committee with Iraq had been 
proposed to discuss unitization of the shared fields along 
the northern border, but that the Iraqis had yet to submit 
names for the committee.  End Summary. 
 
Northern Oilfields Vote Likely Soon 
----------------------------------- 
 
3.  (SBU) During an October 30 meeting with the Ambassador, 
Energy Minister Shaykh Ahmad Fahd Al-Ahmad Al-Sabah told the 
Ambassador that prospects for a National Assembly vote on the 
northern oilfields project were good for November or December 
and that he expected it to pass.  He said that he had "more 
than enough votes" for the project, and that he hoped to 
bring it to the newly elected parliamentary Economic and 
Financial Affairs Committee after Ramadan ended.  He said 
that he would ask the Cabinet to request a special National 
Assembly session in November and that he wanted to have the 
bill voted on by January.  U/S Al-Own told us the same thing 
on October 29, also saying that he expected the vote to pass 
easily. 
 
4.  (SBU)  The Minister said that there were seven consortium 
approved for bidding on the estimated $2 billion engineering, 
procurement and construction (EPC) contract for the 2,500 MW 
Al-Zour North power plant, and that six of the seven included 
an American company.  He said that the prospects for an 
American firm's involvement in the EPC contract were "very 
good." 
 
Ministry of Energy Interested In New Energy Technologies 
--------------------------------------------- ----------- 
 
5.  (SBU) During an October 29 meeting with the Ambassador, 
Ministry of Energy Undersecretary Issa Al-Own said that the 
GOK would be spending $100 million to support research into 
new energy technologies and new energy supplies.  He spoke 
highly of a conference he recently attended in Houston and a 
roundtable he attended in Washington, saying that the events 
brought interesting new energy technologies to his attention. 
 He was particularly impressed with research into the use of 
hydrocarbons in fuel cells, as opposed to hydrogen.  He said 
that this would allow the gas-based delivery system, of gas 
stations and pipelines, to remain useful in the future. 
Al-Own also spoke with interest of a technology that allows 
for the capture and recycling of carbon dioxide emissions. 
These two technologies, he explained, would be of interest to 
a country as dependent on hydrocarbons as Kuwait. 
 
Expanding the Energy Dialogue 
----------------------------- 
 
6.  (SBU) Besides the conferences, Al-Own also met with 
Department of Energy counterparts in Washington.  He said 
 
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that he had good talks with DoE Deputy Secretary Clay Sell 
and Senior International Policy Advisor Molly Williamson, and 
that he had proposed to hold an annual dialogue in order to 
further energy cooperation.  Al-Own said that the next step 
would be for him to send a letter to DoE DepSec Sell 
suggesting the venue and topic for the first meeting, with 
the location of the meeting alternating each year between 
Kuwait and the U.S.  The main purpose of the meetings would 
be to "exchange information about investments, OPEC, and 
other energy issues."  Al-Own suggested that the meetings 
start at the Undersecretary level and then devolve to the 
technical experts as time went on.  He emphasized that the 
GOK objective for the dialogue was practical results, not 
political symbolism. 
 
GCC Strategic Studies Center Moves Forward 
------------------------------------------ 
 
7.  (SBU) Al-Own said that more progress had been made on the 
establishment of the "GCC Center for Strategic Studies," a 
GCC-wide energy think tank that he earlier described to 
Embassy officers (Ref A.)  He said that agreement had been 
reached for the Center to be hosted in Kuwait and that, with 
the GCC energy ministers' approval in December, the 
organizational framework could be created in January 2006. 
He said that the Center would contain "all GCC oil data" and 
would be useful as a one-stop resource for Western 
researchers.  The people establishing the Center wish to 
bring in the expertise of an outside consultant to organize 
the center and have narrowed their choice to the U.S.-based 
Center for Strategic and International Studies (CSIS) and 
"two or three European organizations," according to Al-Own. 
He appeared to favor CSIS, saying he had a "very good 
meeting" with CSIS Executive Vice President Robin Niblett 
during his trip. 
 
Gas Supplies Still A Concern 
---------------------------- 
 
8.  (C) The supply of gas for Kuwait's power and 
petrochemical plants still remains a concern for Al-Own, but 
he said that he saw progress on a small but promising 
cooperation agreement to import gas from Iraq (Ref B).  The 
agreement would bring 35 million cubic feet of gas per day 
from Iraq to Kuwait to begin with, and then would be expanded 
to 200 million cubic feet per day.  Al-Own said that he hoped 
that Iraq was "over the political turbulence" and that more 
stability would move things forward on this gas deal.  He 
said that KPC's external exploration subsidiary, KUFPEC, was 
investing in the "Siba" gas field, located southeast of 
Basrah along the Iraq-Iran border, and was hoping to bring 
additional supplies online from that field. 
 
9.  (C) Referring to the long-stalled gas pipeline project 
between Qatar and Kuwait, Al-Own said that he was "not giving 
up on the Qataris," but that "the way is not easy," because 
of Saudi objections to the deal.  He said that Kuwait and 
Qatar would make another try to resolve this dispute at the 
upcoming GCC meetings.  Without going into details, he said 
that the deal for Kuwait to import gas via pipeline from Iran 
was "getting a little complex."  He added that Kuwait was now 
ready to do a seismic survey of the disputed offshore 
Al-Durra field, but just on the area not under dispute with 
Iran.  Al-Own said that this field might be able to produce 
as much as 400-600 million cubic feet of gas per day, and 
that it would be shared with Saudi Arabia since the field 
lies in the offshore portion of the divided zone. 
 
Energy Cooperation with Iraq 
---------------------------- 
 
10.  (C) Al-Own offered his opinion that "Iraq would need ten 
years to produce (oil) at a higher capacity than the 
present," and that this would only occur with "a proper 
program of development and rehabilitation" of the oil sector. 
 He said that a joint committee with Iraq had been proposed 
to discuss unitization of the shared fields along the 
northern border, but that the Iraqis had yet to submit names 
for the committee.  He did not foresee these discussions 
having any effect on the proposal to bring in foreign 
companies to help develop the northern oilfields. 
 
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Visit Embassy Kuwait's Classified Website: 
http://www.state.sgov.gov/p/nea/kuwait/ 
 
KUWAIT 00004648  003 OF 003 
 
 
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LEBARON