US embassy cable - 03KUWAIT1010

C O N F I D E N T I A L KUWAIT 001010 
 
SIPDIS 
 
STATE FOR TASK FORCE 1 - EB ACTION OFFICER 
STATE ALSO FOR EB/ESC AND NEA/ARP 
TREASURY FOR OASIA 
USDOC FOR 4520/MAC/AME 
DOE FOR IE - L. COBURN AND C. WASHINGTON 
 
E.O. 12958: DECL: X5, X6 
TAGS: EPET, KU 
SUBJECT: KUWAIT OIL UPDATE -- MARCH 20, 2003 
 
REF: KUWAIT 1002 AND PREVIOUS 
 
Classified By: DCM Frank C. Urbancic for reasons 1.5. (B) and (D) 
 
1. (C) A full breakdown of KPC production was not available 
today, but a senior KPC official reported total output was 
2.45 million barrels for the period 0500 3/19/03 to 0500 
3/20/03. 
 
2.(C) Following several missile attacks aimed at Kuwait, a 
senior KPC official contacted EconChief to ascertain the risk 
such missile attacks posed to Kuwait's refineries.  After 
consulting with OMC-K officials and the Ambassador, EconChief 
told the KPC official that while the refineries are 
potentially within the outer range of some Iraqi missiles, 
the refineries are within the coverage of Patriot batteries 
that are performing admirably to this point.  EconChief also 
noted that Iraq appears to be targeting military targets, not 
commercial or civilian targets.  The KPC official appreciated 
the assessment. 
 
3.(C) KPC officials report that "three Japanese customers and 
one shipping company...are not prepared to enter the Gulf in 
the present circumstances."  KPC expects that other firms may 
follow suit, and that the move could affect loading 
operations at other Northern Gulf ports such as Ras Tanura. 
KPC officials intend to initiate "shuttle services" to move 
crude and product to the Southern Gulf for transfer to 
waiting tankers."  One KOTC Tanker captain refused to operate 
in the Northern Gulf, he has been replaced.  KPC has the 
capacity to move 100,000 to 200,000 bpd to Khor Fakkan, but 
does not intend to "advertise" the fact that it is allowing 
some customers to load there, for fear all will demand the 
same service. 
 
4. (U) Dow Jones and Reuters news wires reported on 3/19 
comments by KPC officials that Kuwait is selling an 
additional 300,000 to 350,000 barrels per day in an effort to 
dampen high oil prices.  Most of the oil is being sold on 
term contracts to Asian buyers, but the official said spot 
sales may also occur "later on, if there is a need."  KPC 
officials also said that KPC has no plans to stop any 
operations, adding that operations would continue as normal 
unless physical hostilities were directed against the 
country's oil facilities.  The Reuters report added that 
Kuwait has plans to use its own fleet to carry crude and 
product to Khor Fakkan, near Fujairah, where Kuwait has 
storage facilities. (Note: Khor Fakkan is located outside the 
Persian Gulf, on the Gulf of Oman. End Note.) 
JONES