US embassy cable - 03ABUDHABI2132

UNCLAS ABU DHABI 002132 
 
SIPDIS 
 
USDOC FOR 532/OEE/A.HERNANDEZ 
USDOC FOR 532/OEA/M.CORSEY 
ROME FOR CUSTOMS ATTACH 
STATE FOR NEA/L. MALENAS 
 
E.O. 12958:    N/A 
TAGS: ETTC, TC 
 
SUBJECT: EXTRANCHECK: PRE-LICENSE CHECK REQUEST FOR D307110 
 
REF: USDOC 1988 
 
1.   REFTEL REQUESTED POST CONDUCT A PRE-LICENSE CHECK ON 
SAFEWATER CHEMICALS FOR THE EXPORT OF ELEVEN NICKEL-LINED PUMPS 
FOR USE IN THE MANUFACTURE OF CHEMICALS USED IN THE OIL AND GAS 
INDUSTRY. 
 
2.   ON APRIL 29, 2003, COMMERCIAL OFFICER MARY O'BRIEN MET WITH 
MARK CONNER OF AL JABER ENERGY SERVICES, WHO IS THE PROJECT 
MANAGER FOR THE SAFEWATER PROJECT.  (NOTE: COMOFF O'BRIEN HAD 
PREVIOUSLY MET WITH MR. CONNER IN MARCH 2003 REGARDING THE NEED 
FOR EXPORT LICENSES FOR THE SAFEWATER FACILITY.)  AL JABER GROUP, 
OF WHICH AL JABER ENERGY SERVICES IS A PART, IS A HUGE 
CONGLOMERATE INDUSTRIAL FIRM HERE IN THE UAE WITH BUSINESSES 
INVOLVED IN GENERAL CONTRACTING; MARINE WORKS; IRON, STEEL, 
REBAR, AND ALUMINUM FABRICATION; ASPHALT PRODUCTION; AND HEAVY 
EQUIPMENT SALES.  IN 2001, AL JABER'S GROSS REVENUE WAS $410 
MILLION.  THEIR MAIN FACILITY CONSISTS OF 500,000 SQUARE METERS 
ON THE SEASIDE OF MUSSAFAH, ABU DHABI'S NEW INDUSTRIAL AREA. 
 
3.   AL JABER HAS RECENTLY BEGUN CONSTRUCTION ON A CHLOR-ALKALI 
PLANT THAT IS ABOUT A TEN MINUTE DRIVE WITHIN MUSSAFAH FROM AL 
JABER'S MAIN FACILITY WHERE MR. CONNER'S OFFICE IS LOCATED.  THIS 
FACILITY WILL MANUFACTURE HYDROCHLORIC ACID, SODIUM HYPOCHLORITE 
(BLEACH), AND CAUSTIC SODA.  THESE PRODUCTS ARE EXTENSIVELY USED 
IN OIL WELLS AND OTHER INDUSTRIAL PROCESSES SUCH AS WATER 
PURIFICATION, PAPER MILLS, AND ALUMINUM (SPELLED ALUMINIUM HERE) 
PROCESSING.  IN FACT, WHEN COMMOFF WENT TO THE CONSTRUCTION SITE, 
THERE ARE A PAPER MILL AND AN ALUMINUM EXTRUSION FACILITY VISIBLE 
FROM THE PLOT WHERE THE PLANT IS BEING BUILT. 
 
4.   SAFEWATER HAS PURCHASED AROUND $9 MILLION OF OTHER U.S. 
EQUIPMENT FOR THIS PROJECT, MOST OF WHICH WILL COME FROM IONICS 
IN WATERTOWN, MA.  THIS EQUIPMENT DOES NOT REQUIRE EXPORT 
LICENSES BASED ON INFORMATION MR. CONNER HAS RECEIVED FROM 
IONICS. 
 
5.   BECAUSE OF THE HIGHLY CAUSTIC NATURE OF THE SUBSTANCES BEING 
PRODUCED THE FACILITY WILL REQUIRE THE ELEVEN NICKEL-LINED PUMPS 
LISTED ON THIS LICENSE.  IN ADDITION, IN ORDER TO PRODUCE CAUSTIC 
SODA, SAFEWATER WILL UTILIZE AN EVAPORATOR WHICH INCORPORATES A 
NICKEL-LINED PUMP ALSO FROM GOULDS.  THAT PUMP IS THE SUBJECT OF 
EXPORT LICENSE D305336.  THE PUMP WILL BE SENT TO GEA IN FRANCE, 
INCORPORATED INTO THE EVAPORATOR AND THEN EXPORTED TO THE UAE. 
 
6.   ON MAY 3, 2003, COMMOFF O'BRIEN SPOKE WITH AHMED SOBHI, 
SALES MANAGER, DAFF TRADING, ABU DHABI.  MR SOBHI SAID THAT DAFF 
TRADING HAS BEEN THE AGENT FOR GOULDS PUMPS IN THE UAE FOR OVER 
15 YEARS.  HE SAID THAT WHEN DAFF SENDS A PURCHASE ORDER TO 
GOULDS, DAFF IS REQUIRED TO IDENTIFY THE END USER AND END-USE TO 
GOULDS.  SAFEWATER PLACED A PURCHASE ORDER FOR 25 PUMPS 
ALTOGETHER WITH DAFF. IN THE QUOTE TO SAFEWATER DAFF INFORMED 
SAFEWATER THAT AN EXPORT LICENSE WAS REQUIRED FOR THE EXPORT OF 
THE ELEVEN NICKEL-LINED PUMPS.  MR. SOBHI EXPLAINED TO COMOFF 
THAT THE PUMPS WILL BE DELIVERED TO THE PORT HERE IN THE UAE AND 
THEN CLEARED THROUGH CUSTOMS BY DAFF.  THE PUMPS WILL THEN BE 
DELIVERED TO SAFEWATER'S FACILITY IN MUSSAFAH.  MR. SOBHI KNOWS 
THE RESTRICTIONS ON EXPORTING ALL OF GOULDS' PRODUCTS TO 
SANCTIONED COUNTRIES AND IS AWARE DAFF MUST ABIDE BY ALL 
CONDITIONS THAT MIGHT BE IMPOSED ON THE LICENSE. 
 
7.   AS A SIDE NOTE, THE UAE HAS BEGUN THE REGISTRATION PROCESS 
FOR CHEMICAL COMPANIES IN THE UAE.  THEREFORE IF ANY OF THE 
CHEMICALS PRODUCED AT SAFEWATER'S FACILITY ARE SUBJECT TO CWC 
VERIFICATION, THE MECHANISM FOR REGISTRATION AND REPORTING IS 
UNDERWAY. 
 
8.   RECOMMENDATION:  COMMOFF RECOMMENDS DAFF TRADING AND 
SAFEWATER CHEMICALS AS RELIABLE RECIPIENTS OF CONTROLLED U.S. 
ORIGIN COMMODITIES AND TECHNOLOGY. 
 
WAHBA