UAE: MAJOR SHAKE-UP IN THE SUPREME PETROLEUM

C O N F I D E N T I A L SECTION 01 OF 03 ABU DHABI 002254

SIPDIS

NOFORN

STATE FOR E, EB/ESC/ESP, INR/EC, INR/B, NEA/ARP AND NEA/RA
COMMERCE FOR 1000/OC/
COMMERCE FOR 4520/ITA/IEP/ONE
COMMERCE FOR 4530/ITA/MAC/OME/DGUGLIELMI,
4500/ITA/MAC/DAS
3131/CS/OIO/ANESA
USDOE FOR OFFICE OF THE SECRETARY HONDA HUDOME

E.O. 12958: DECL: 07/06/09
TAGS: ECON EFIN EINV EPET PINS PREL PGOV TC
SUBJECT: UAE: MAJOR SHAKE-UP IN THE SUPREME PETROLEUM
COUNCIL

REF: A) 02 ABU DHABI 1415

B) ABU DHABI 735
C) ABU DHABI 1197
D) ABU DHABI 13


1. (U) Classified by Charge d'Affaires, a.i. Richard A.
Albright, for reasons 1.5 (b) and (d).


2. (C/NF) Summary and comment: In a surprise move, Abu
Dhabi Crown Prince Shaykh Khalifa bin Zayed Al-Nahyan
overhauled the membership of the secretive Supreme
Petroleum Council (SPC) on June 29. Long-time advisers to
UAE President Zayed and aging royal family members were
ousted and replaced by younger, Western-educated
technocrats and National Oil Company (ADNOC) heavyweights.
Although Khalifa presides over the SPC (and local press
reported that Khalifa initiated the reorganization),it is
probable that the more progressive UAE Armed Forces Chief
of Staff and Abu Dhabi Deputy Crown Prince Shaykh Mohammed
bin Zayed (MbZ) orchestrated the membership change.


3. (C/NF) The SPC is an exclusive organization that
determines Abu Dhabi's oil policy (ref A). It is the SPC,
not the Petroleum Ministry, which oversees ADNOC and
determines Abu Dhabi's position on OPEC issues. The SPC
also makes decisions about international oil company
participation in major oil projects within the emirate, and
most recently delayed a controversial decision to award an
equity stake in the mammoth Upper Zakum offshore oil field
to ExxonMobil, BP, or Shell (ref B). The new SPC members
are favorably disposed to the United States, and we're
confident that U.S. oil companies will benefit from the
organization's reform. We assess that this is a
continuation of many expected personnel changes leading to
the rejuvenation and modernization of local and federal
government institutions, including the Abu Dhabi Executive
Council, the federal Cabinet and the Federal National
Council (ref C). End summary and comment.

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Who's In
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4. (C) The new membership of the SPC indicates that CP
Khalifa and Deputy CP Mohammed are consolidating their
power, and replacing their father's long time advisers with
trusted technocrats and other competent, Western-educated
sons of Shaykh Zayed. Shaykh Khalifa reappointed his half
brothers, MbZ and UAE Deputy Prime Minister Shaykh Sultan
bin Zayed Al-Nahyan to the SPC. Although the latter plays
a marginal role in Abu Dhabi politics these days, Shaykh
Khalifa probably retained Sultan out of respect for his
title and senior position within the ruling family.


5. (C) Shaykh Khalifa also kept his trusted adviser,
Mohammed Habroush Al-Suweidi, who is enormously respected,
incorruptible, and while semi-reclusive, plays a key
behind-the-scenes-role in almost all of Abu Dhabi's main
financial institutions. Al-Suweidi's protege, ADNOC Board
Member Jua'an Salem Al-Dhaheri and Abu Dhabi Investment
Authority (ADIA) Board Member Khalifa Mohammed Khalifa Al-
Kindi also remain on the SPC and have considerable
experience in Abu Dhabi's oil sector.


6. (C) New appointees to the SPC include up-and-comer
Shaykh Hamed bin Zayed Al-Nahyan -- a young, dynamic and
Western educated son of UAE President Zayed from the Bani
Muza line and Chairman of the Abu Dhabi Economic
Department. He also sits on the powerful Abu Dhabi
Executive Council, and a number of American businessmen
here say that Hamed is a progressive thinker who has
supported Abu Dhabi's efforts to privatize and reform its
quasi-governmental commercial holdings.


7. (C) Shaykh Mansour bin Zayed Al-Nahyan, a relatively
young son (b. 1970) of UAE President Zayed and UAE First
Lady Fatima bint Mubarak, also was appointed to the SPC.
Mansour is the Director of the President's Office and the
relatively new Chairman of the International Petroleum
Investment Company (IPIC). Although he has some experience
managing Abu Dhabi's oil investments, Mansour probably owes
his new SPC position to the fact that he is a Bani Fatima
and a powerful palace insider.

8. (C) One of the more surprising new appointments to the
SPC is ADNOC's Deputy CEO and Director of the Exploration
and Production Department Abdullah Nasser Al-Suweidi, who
plays an integral role in the supervision of Abu Dhabi's
overall oil production (bio notes in ref D). He is by far
the lowest ranking member of the SPC, but a highly
respected technocrat and heavyweight within the ADNOC
hierarchy. Abdullah oversees all onshore and offshore
exploration and development in the emirate, and manages
three joint venture operations: Abu Dhabi Company for
Onshore Operations (ADCO),Abu Dhabi Marine Operations
Company (ADMA-OPCO),and Zakum Development Company (ZADCO),
and ADNOC's sole risk concessions. He worked his way
through the ranks of the national oil company, having
previously served as ADNOC's Director of the Planning and
Coordination Department, the Industrial Projects Division,
and chaired another ADNOC subsidiary company, the Abu Dhabi
Gas Liquefication Company (ADGAS). Abdullah is U.S.-
educated, well informed and has been the key supervisor of
the Upper Zakum bidding process. His brother is the
Governor of the UAE central Bank.

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Who's Out
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9. (C/NF) The elimination of several ruling family members
with honorary positions on the SPC and tribal ties to
President Zayed, or businessmen shaykhs with long-standing
connections to the ruling family is notable. There's been
no mention of these men in the local press, and it's
unclear whether they were forcibly retired or demoted to
some lesser consultative role. The UAE's first Oil
Minister, Dr. Mana'a Saeed Al-Otaiba served for many years
as a personal adviser to Shaykh Zayed, but seems to have
fallen out of favor with most of the leading shaykhs in
recent years. UAE Deputy Prime Minister Shaykh Hamdan bin
Zayed has told the Ambassador that Al-Otaiba often makes
bold initiatives without first consulting with the relevant
players.


10. (C) Undersecretary of Shaykh Khalifa's Diwan, Ali bin
Ahmed Al-Dhaheri, also was eliminated from the SPC. There
recently have been indications that Al-Dhaheri's influence
with Shaykh Khalifa had declined; he owed his position on
the SPC as much to friendship and loyalty as to any innate
ability or expertise. Al-Dhaheri also is the Secretary-
General of the Abu Dhabi Executive Council, but we have no
information suggesting that he has been stripped of his
other positions.


11. (C) ADIA Director Mohammed Eid Al-Muraikhi, and
Shaykhs Tahnoun bin Mohammed Al-Nahyan and Suroor bin
Mohammed Al-Nahyan were ousted from the SPC. In past
conversations with the Ambassador, they had seemed
relatively uninformed about the SPC's agenda or relevant
oil issues. Tahnoun's elimination is significant because
of his senior position within the ruling family; he is
Shaykh Zayed's highly respected but only informally
schooled representative in the emirate's Eastern Region
(i.e., Governor of Al-Ain). Suroor holds the largely
ceremonial position of Chamberlain of the Presidential
Court, but has largely divorced himself from governmental
responsibilities in recent years. These older and less-
educated shaykhs also may have been unduly influenced by
what was heard on the majlis circuit -- which often is
intended to influence as much as inform -- and relied less
on the expertise of ADNOC to evaluate multi-million dollar
petroleum projects.

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Good News For U.S. Companies
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12. (C/NF) The former SPC membership was based more on
traditional tribal connections rather than acumen or
expertise -- the SPC had no economists, policy planners,
lawyers and almost no formal staff at all. The new
membership represents the best and brightest that Abu
Dhabi's oil sector has to offer. These former and current
ADNOC leaders and assembles a group of men are favorably
disposed to the United States -- they are our key
interlocutors on oil issues, are Western educated, have
children studying in the United States, and travel to the
U.S. frequently for business and leisure.


13. (C/NF) The shake-up in SPC membership appears likely
to confirm what MbZ told the Ambassador earlier this year -
- the SPC intends to award a 28 percent stake of the Zakum
Development Company (ZADCO) to U.S. company ExxonMobil.
The change in SPC membership may, in fact, have been an
effort to build consensus for the U.S. oil giant's bid.
The SPC's delay in making a final decision on the Zakum
project in January indicated division among the SPC
membership. In the absence of consensus for a single
company, the SPC short listed three companies (ExxonMobil,
BP and Shell) for the project and directed ADNOC to seek
"further clarification" of these select bids.


14. (C/NF) In January, it was clear that ExxonMobil was
the favorite of ADNOC, and ADNOC CEO Yousef bin Omeir had
convinced Shaykh Khalifa to support the ExxonMobil bid. In
meetings with the Ambassador, both MbZ and Mohammed
Habroush Al-Suweidi intimated that they, too, favored
ExxonMobil's bid. Chamberlain of the President's Court
Shaykh Suroor bin Mohammed, however, was a known advocate
for BP, and may have voiced his opposition to Exxon. Also
in meetings with the Ambassador, Shaykh Tahnoon bin
Mohammed seemed uninformed about Upper Zakum. In the
coming months, the new SPC membership of current and former
ADNOC technocrats could well support unanimously Exxon's
bid for the Upper Zakum project.

Albright