EXTRANCHECK: PRE-LICENSE CHECK REQUEST FOR D307110

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