US embassy cable - 05MANAMA1601

C O N F I D E N T I A L SECTION 01 OF 02 MANAMA 001601 
 
SIPDIS 
 
NEA/ARPI 
NSC FOR CHASE HUTTO 
 
E.O. 12958: DECL: 10/23/2015 
TAGS: ENRG, EPET, ETRD, ECON, BA 
SUBJECT: AMBASSADOR CALLS ON NEWLY-APPOINTED NATIONAL OIL 
AND GAS AUTHORITY CHAIRMAN 
 
REF: A. MANAMA 816 
     B. DOHA 934 
 
Classified By: Ambassador William T. Monroe, reasons 1.4 (b) and (d) 
 
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SUMMARY 
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1. (C) The Ambassador called on newly-appointed National Oil 
and Gas Authority (NOGA) Chairman Dr. Abdul Hussain Ali Mirza 
October 24.  NOGA replaces the Ministry of Oil and has been 
established by the GOB to manage the government's oil 
portfolio.  Mirza said that he planned to commission a fresh 
examination of geological data in the hope of discovering new 
Bahraini crude oil deposits.  He said Bahrain would need to 
import gas to meet future gas and power demands dictated by 
industrial expansion plans and was hopeful that a proposed 
Qatar-Bahrain gas pipeline would help meet that need.  Mirza 
said partial privatization of Bahrain's oil and gas industry 
is among the topics to be considered by NOGA's seven-member 
board of directors.  End Summary. 
 
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OIL AND GAS PORTFOLIO HIGHLIGHTED 
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2. (U) In a reshuffling of the cabinet September 29, Minister 
of State Mirza Hussain Ali Mirza was named Chairman of the 
newly-formed NOGA.  The Prime Minister said in a statement 
that the reshuffle would enhance the Kingdom's achievements 
in the oil and industrial sectors and would generate more 
income for the state.  NOGA replaces the Ministry of Oil and 
has been established by the GOB to manage the government's 
oil portfolio.  The Oil Ministry's staff will transfer to 
NOGA and Mirza will be an ex-oficio member of the Economic 
Development Board. 
 
3. (U) The GOB's oil portfolio currently includes: 100 
percent of the Bahrain Petroleum Company (BAPCO); 75 percent 
of Bahrain National Gas Company (Banagas) with the remaining 
25 percent held by Caltex; 33 percent of Gulf Petrochemical 
(GPIC) with 67 percent split evenly between Saudi Arabia and 
Kuwait; and 60 percent of Bahrain Aviation Fuel Company 
(BAFCO) with 23 percent held by Caltex, and 17 percent held 
by British Petroleum. 
 
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FRESH SOURCES OF CRUDE AND GAS SOUGHT 
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4. (SBU) Mirza told the Ambassador October 24 that he planned 
to commission a fresh examination of geological data in the 
hope of discovering new Bahraini crude oil deposits.  He 
added that this might lead to the development of joint 
ventures with American companies, e.g. Chevron, which has a 
historical relationship with Bahrain, to conduct new offshore 
exploration.  Pointing to a large geological survey map on 
his wall, he questioned how Bahrain could be surrounded by 
such rich deposits and yet be as scarcely endowed as existing 
surveys indicated.  "If we manage to make another off-shore 
discovery, it will open a lot of possibilities," he said. 
 
5. (SBU) Mirza said he would seek not only to maximize 
Bahrain's existing resources and refining capacity, but to 
expand them.  He said that given Bahrain's current gas 
production level of one billion cubic feet per day, domestic 
supply is sufficient to meet the Kingdom's current needs. 
However, Bahrain would need to import gas to meet future gas 
and power demands dictated by industrial expansion plans. 
 
6. (C) He said a proposed gas pipeline from Qatar would be a 
valuable source of natural gas needed to meet future demand. 
The Ambassador asked how strong was the commitment of Qatar 
to supply gas to Bahrain.  Mirza noted that Qatar holds the 
third largest gas reserves in the world and said it was his 
impression was that the Qatari government viewed a 
Qatar-Bahrain pipeline favorably.  (Note.  This echoes 
sentiments previously expressed by Minister of Industry and 
Finance Hassan Fakhro and former Foreign Minister Shaikh 
Mohammed bin Mubarak Al-Khalifa, as reported in Ref. A.  End 
note.)  Mirza said he was accompanying the Crown Prince on a 
visit to Qatar that evening and that the pipeline would 
likely be a key topic of discussion. 
 
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PRIVITIZATION 
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7. (C) Regarding debate recently carried in the local press 
over the possible privatization of Bahrain's oil and gas 
industry, Mirza said, "it has to be done."  He acknowledged 
public fears that privatization could lead to a loss of jobs, 
but said that at least some oil company assets would need to 
be privatized, though this would take some time. 
 
8. (SBU) Mirza said privatization of the industry is among 
the topics to be considered by NOGA's seven-member board of 
directors, the remaining members of which have yet to be 
appointed.  Mirza said at least one member could be drawn 
from a major oil company.  The King, the Crown Prince and the 
Prime Minister would need to approve the board's membership. 
 
 
MONROE