US embassy cable - 03KUWAIT3589

C O N F I D E N T I A L KUWAIT 003589 
 
SIPDIS 
 
STATE FOR NEA/ARP, NEA/NGA 
STATE FOR EUR/SE 
 
E.O. 12958: DECL: 08/02/2013 
TAGS: PREL, EPET, ETRD, KU, IZ, TU 
SUBJECT: (C) GOK CLAIMS TURKS BUYING IRAQI OIL, 
UNDERCUTTING KUWAITI MOGAS SALES 
 
Classified By: ADCM John G. Moran for reason 1.6 x 6. 
 
1. (U) This is an action request.  Please see para. 4. 
 
2. (C) During their July 27 meeting, MFA U/S Khaled 
Al-Jarallah told the Ambassador that Turkish tanker trucks 
carrying mogas into Iraq for the CPA under a Kellogg, Brown 
and Root (KBR) contract were returning to Turkey laden with 
Iraqi oil supplied to Turkey at below-market price.  Jarallah 
claimed the profit from the sale of this cut-rate oil was 
allowing the Turks to sell mogas to KBR at a discounted rate, 
undercutting competing Kuwaiti consortium Altanmia.  Jarallah 
asserted this was partially to blame for the fact that KBR is 
now buying a larger share of mogas from Turkey than Kuwait. 
When asked, Jarallah could not say who was selling the oil to 
the Turks. 
 
3. (C) In a conversation with KBR COO for Government 
Operations Thomas Crum, on July 31, Poloff was informed that 
KBR's purchase of mogas from various sources is directed "in 
writing" by the U.S. Army Corps of Engineers.  Mr. Crum said 
the Corps' decision to buy more fuel from Turkey was most 
likely dictated by the legal requirement for the Corps to 
provide security for the transport of the fuel, which it has 
found difficult in Southern Iraq. 
 
4. (C) Action Request/Commment:  Ongoing security concerns in 
Southern Iraq are disrupting the transport of both mogas and 
LPG from Kuwait into Iraq.  If left unaddressed, the lack of 
security will continue to severely restrict the flow of much 
needed LPG and mogas to Iraq from Kuwait.  Given the GOK's 
strong operational support for the liberation of Iraq and its 
continuing supply of fuel for U.S. forces in Iraq at no cost 
to the USG, reduction of KBR's purchases of LPG and mogas 
from Kuwait would be an irritant in bilateral relations that 
could have significant negative repercussions for U.S. 
operations in Kuwait and Iraq.  We recommend that steps be 
taken to prevent this by providing sufficient security for 
sustained shipments of mogas and LPG from Kuwait.  Please 
advise. 
 
5. (U) Baghdad minimize considered. 
JONES