Identifier
Created
Classification
Origin
03ABUDHABI4694
2003-10-21 13:50:00
CONFIDENTIAL
Embassy Abu Dhabi
Cable title:
UAE: DOLPHIN SIGNS MAJOR GAS SUPPLY AGREEMENTS
how-tonull Diana T Fritz 03/20/2007 04:09:06 PM From DB/Inbox: Search Results Cable Text: CONFIDENTIAL SIPDIS TELEGRAM October 21, 2003 To: No Action Addressee Action: Unknown From: AMEMBASSY ABU DHABI (ABU DHABI 4694 - ROUTINE) TAGS: EPET, PGOV, BEXP, ENRG, ECON, EINV Captions: None Subject: UAE: DOLPHIN SIGNS MAJOR GAS SUPPLY AGREEMENTS Ref: None _________________________________________________________________ C O N F I D E N T I A L ABU DHABI 04694 SIPDIS CXABU: ACTION: ECON INFO: DCM POL P/M AMB Laser1: INFO: FCS DISSEMINATION: ECON CHARGE: PROG APPROVED: AMB: MWAHBA DRAFTED: ECON:CCRUMPLER CLEARED: DCM: RALBRIGHT; ECON: GRANA VZCZCADI911 RR RUEHC RUEHHH RUEHDE RUCPDOC RHEBAAA DE RUEHAD #4694 2941350 ZNY CCCCC ZZH R 211350Z OCT 03 FM AMEMBASSY ABU DHABI TO RUEHC/SECSTATE WASHDC 2157 INFO RUEHHH/OPEC COLLECTIVE RUEHDE/AMCONSUL DUBAI 3489 RUCPDOC/USDOC WASHDC RHEBAAA/DEPT OF ENERGY WASHDC
C O N F I D E N T I A L ABU DHABI 004694
SIPDIS
DEPT FOR NEA/RA, NEA/ARP, INR/EC, EB/IEP, EB/CBA
USDOE FOR INT'L AFFAIRS - COBURN, ALSO CALIENDO
USDOE FOR OFFICE OF THE SECRETARY - RHONDA HUDOME
USDOC FOR 1000/OC/
USDOC FOR 4520/ITA/IEP/ONE
USDOC FOR 4530/ITA/MAC/ONE/DGUGLIELMI
4500/ITA/MAC/DAS/WILLIAMSON
3131/CS/OIO/ANESA
E.O. 12958: DECL 10/21/08
TAGS: EPET PGOV BEXP ENRG ECON EINV TC
SUBJECT: UAE: DOLPHIN SIGNS MAJOR GAS SUPPLY AGREEMENTS
REF: ABU DHABI 1513
(U) Classified by Ambassador Marcelle M. Wahba, for reasons
1.5 (b) and (d).
C O N F I D E N T I A L ABU DHABI 004694
SIPDIS
DEPT FOR NEA/RA, NEA/ARP, INR/EC, EB/IEP, EB/CBA
USDOE FOR INT'L AFFAIRS - COBURN, ALSO CALIENDO
USDOE FOR OFFICE OF THE SECRETARY - RHONDA HUDOME
USDOC FOR 1000/OC/
USDOC FOR 4520/ITA/IEP/ONE
USDOC FOR 4530/ITA/MAC/ONE/DGUGLIELMI
4500/ITA/MAC/DAS/WILLIAMSON
3131/CS/OIO/ANESA
E.O. 12958: DECL 10/21/08
TAGS: EPET PGOV BEXP ENRG ECON EINV TC
SUBJECT: UAE: DOLPHIN SIGNS MAJOR GAS SUPPLY AGREEMENTS
REF: ABU DHABI 1513
(U) Classified by Ambassador Marcelle M. Wahba, for reasons
1.5 (b) and (d).
1. (C) Summary and comment: The Ambassador met with
Occidental Petroleum CEO Dr. Ray Irani 10/21 -- days after
Dolphin Energy Limited (DEL) signed two long-term supply
agreements with the UAE's major power and water companies.
DEL, in which Oxy maintains 24.5 percent equity, intends to
begin pumping gas from Qatar's giant North Field in 2006.
The supply agreements represent a major step forward for
the Dolphin project, which heretofore had committed $3.5
billion to build a Qatar-UAE pipeline, but had no confirmed
customers in place. The gas pricing agreement remains to
be agreed with Dubai. Dr. Irani commented that most of the
major international energy companies would have waited
until the terms of the price of the gas had been decided
before signing a supply agreement, but Oxy is confident
that pricing agreements with Abu Dhabi and Dubai are only a
matter of time -- noting that senior UAE shaykhs "have
given [him] their word." End summary.
-------------- --------------
Supply Agreements: Signed, Sealed, And Delivered...
-------------- --------------
2. (C) More than a year after the selection of U.S. firm
Occidental Petroleum to participate in the ambitious
Dolphin project to pump natural gas from Qatar to the UAE,
new UAE Deputy Premier and de facto Foreign Minister Shaykh
Hamdan bin Zayid signed 10/19 two supply agreements on
behalf of Dolphin with the UAE's major power and water
companies. Dr. Irani confirmed that these initial
agreements commit the UAEG to the purchase of 2 billion
cubic units per day of natural gas from DEL. Dr. Irani was
confident, however, that the UAE would agree to purchase up
to 3 billion cubic units a day by 2007 or 2008 to keep pace
with Dubai's development and resultant increase in gas
demand.
3. (U) The initial agreement with the Abu Dhabi Water and
Electricity Authority (ADWEA) was signed by its chairman,
Shaykh Diyab bin Zayid, and provides for a 25-year supply
of gas from Qatar to ADWEA's subsidiaries -- namely the Al-
Taweelah Power Company that manages the major Al-Taweelah
power plant located halfway between Abu Dhabi and Dubai.
Al-Taweelah will receive natural gas from Qatar's Ras
Laffan refinery and distribute gas to secondary power
plants throughout the Emirates.
4. (U) The second agreement with Union Water and
Electricity Company (UWEC) was signed by its chairman,
Shaykh Hamed bin Zayid, and supercedes a short-term supply
contract with DEL initiated earlier this year. The new
agreement commits Dolphin to provide natural gas to UWEC's
new power and desalination plant in Fujairah for 25 years,
and will utilize existing pipelines from Al-Taweelah to Al-
Ain, and a new pipeline (currently under construction) from
Al-Ain to Fujairah to transport the gas.
--------------
...But The Pricing Agreements?
--------------
5. (C) With the supply agreements signed, Oxy now is eager
to resolve the pricing issue (see ref). Dr. Irani
speculated that Abu Dhabi Crown Prince Khalifa would insist
that Dubai Crown Prince Muhammed bin Rashid (MbR) pay the
same price for Dolphin gas as Abu Dhabi's power and water
companies. Dubai currently receives natural gas from Abu
Dhabi at very low, subsidized prices. Dr. Irani posited
that MbR would acquiesce, but probably request another
subsidy or transfer from Abu Dhabi as compensation. The
Ambassador commented that the political machinations among
the senior shaykhs to resolve the pricing issue would
provide a glimpse into emerging UAE leadership dynamics.
Wahba
SIPDIS
DEPT FOR NEA/RA, NEA/ARP, INR/EC, EB/IEP, EB/CBA
USDOE FOR INT'L AFFAIRS - COBURN, ALSO CALIENDO
USDOE FOR OFFICE OF THE SECRETARY - RHONDA HUDOME
USDOC FOR 1000/OC/
USDOC FOR 4520/ITA/IEP/ONE
USDOC FOR 4530/ITA/MAC/ONE/DGUGLIELMI
4500/ITA/MAC/DAS/WILLIAMSON
3131/CS/OIO/ANESA
E.O. 12958: DECL 10/21/08
TAGS: EPET PGOV BEXP ENRG ECON EINV TC
SUBJECT: UAE: DOLPHIN SIGNS MAJOR GAS SUPPLY AGREEMENTS
REF: ABU DHABI 1513
(U) Classified by Ambassador Marcelle M. Wahba, for reasons
1.5 (b) and (d).
1. (C) Summary and comment: The Ambassador met with
Occidental Petroleum CEO Dr. Ray Irani 10/21 -- days after
Dolphin Energy Limited (DEL) signed two long-term supply
agreements with the UAE's major power and water companies.
DEL, in which Oxy maintains 24.5 percent equity, intends to
begin pumping gas from Qatar's giant North Field in 2006.
The supply agreements represent a major step forward for
the Dolphin project, which heretofore had committed $3.5
billion to build a Qatar-UAE pipeline, but had no confirmed
customers in place. The gas pricing agreement remains to
be agreed with Dubai. Dr. Irani commented that most of the
major international energy companies would have waited
until the terms of the price of the gas had been decided
before signing a supply agreement, but Oxy is confident
that pricing agreements with Abu Dhabi and Dubai are only a
matter of time -- noting that senior UAE shaykhs "have
given [him] their word." End summary.
-------------- --------------
Supply Agreements: Signed, Sealed, And Delivered...
-------------- --------------
2. (C) More than a year after the selection of U.S. firm
Occidental Petroleum to participate in the ambitious
Dolphin project to pump natural gas from Qatar to the UAE,
new UAE Deputy Premier and de facto Foreign Minister Shaykh
Hamdan bin Zayid signed 10/19 two supply agreements on
behalf of Dolphin with the UAE's major power and water
companies. Dr. Irani confirmed that these initial
agreements commit the UAEG to the purchase of 2 billion
cubic units per day of natural gas from DEL. Dr. Irani was
confident, however, that the UAE would agree to purchase up
to 3 billion cubic units a day by 2007 or 2008 to keep pace
with Dubai's development and resultant increase in gas
demand.
3. (U) The initial agreement with the Abu Dhabi Water and
Electricity Authority (ADWEA) was signed by its chairman,
Shaykh Diyab bin Zayid, and provides for a 25-year supply
of gas from Qatar to ADWEA's subsidiaries -- namely the Al-
Taweelah Power Company that manages the major Al-Taweelah
power plant located halfway between Abu Dhabi and Dubai.
Al-Taweelah will receive natural gas from Qatar's Ras
Laffan refinery and distribute gas to secondary power
plants throughout the Emirates.
4. (U) The second agreement with Union Water and
Electricity Company (UWEC) was signed by its chairman,
Shaykh Hamed bin Zayid, and supercedes a short-term supply
contract with DEL initiated earlier this year. The new
agreement commits Dolphin to provide natural gas to UWEC's
new power and desalination plant in Fujairah for 25 years,
and will utilize existing pipelines from Al-Taweelah to Al-
Ain, and a new pipeline (currently under construction) from
Al-Ain to Fujairah to transport the gas.
--------------
...But The Pricing Agreements?
--------------
5. (C) With the supply agreements signed, Oxy now is eager
to resolve the pricing issue (see ref). Dr. Irani
speculated that Abu Dhabi Crown Prince Khalifa would insist
that Dubai Crown Prince Muhammed bin Rashid (MbR) pay the
same price for Dolphin gas as Abu Dhabi's power and water
companies. Dubai currently receives natural gas from Abu
Dhabi at very low, subsidized prices. Dr. Irani posited
that MbR would acquiesce, but probably request another
subsidy or transfer from Abu Dhabi as compensation. The
Ambassador commented that the political machinations among
the senior shaykhs to resolve the pricing issue would
provide a glimpse into emerging UAE leadership dynamics.
Wahba