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