FORMER UAE OIL MINISTER SHARES "SECRET" DOCUMENT

C O N F I D E N T I A L SECTION 01 OF 03 ABU DHABI 000790

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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 03/21/2009
TAGS: EPET PGOV BEXP ENRG ECON EINV TC
SUBJECT: FORMER UAE OIL MINISTER SHARES "SECRET" DOCUMENT
ON ABU DHABI OIL PRODUCTION


1. (U) Classified by Ambassador Marcelle M. Wahba, for
reasons 1.5 (B) and (D).


2. (C/NF) Special Adviser to the President and the UAE's
first Oil Minister Man'a Al-Otaiba recently passed the
Ambassador a document on Abu Dhabi oil production marked
"secret," and dated February 16, 2003. Al-Otaiba told the
Ambassador that he intended to present the document to UAE
Armed Forces Chief of Staff Shaykh Mohammed bin Zayed; the
document communicates his vision for the future of Abu
Dhabi's oil sector -- outlining current production capacity
and suggesting ways to increase oil production during the
next 10 years to maximize revenue.


3. (C) The Al-Otaiba family is closely allied with the Bani
Yas tribal confederation (which includes the Al-Nahyan).
Man'a Al-Otaiba was one of only three university graduates
from Abu Dhabi at the time of the federation (he went to
Baghdad University). He subsequently was selected to be
the UAE's first Petroleum Minister. He led the oil
ministry from its inception until the late 1980s, and
currently is one of 12 members on the Abu Dhabi Supreme
Petroleum Council -- the organization that oversees all of
the emirate's oil production and the Abu Dhabi National Oil
Company (ADNOC),and determines Abu Dhabi's position on
OPEC issues. He seems to have fallen out of favor with
most of the leading shaykhs and has a generally unfavorable
reputation around town. 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.


4. (C) We offer below an unofficial translation of the
"secret" document, but caution that Al-Otaiba intends to
influence the reader as much as inform. We believe that
Al-Otaiba seeks to disparage current ADNOC CEO Yousef bin
Omeir Yousef and cast doubt on Yousef's management of Abu
Dhabi's oil sector, and at the same time burnish his own
credentials among the senior shaykhs. Nevertheless, his
views are interesting given his significant experience in
the UAE oil sector.


5. (C/NF) Begin text of document:

It is my pleasure to submit to Your Highness some important
points on various economic, political and social issues.

I shall begin with a report on the oil sector, in which I
highlight some important features of the petroleum industry
and Abu Dhabi's current production capacity. I also
discuss the possibility of increasing oil production so as
to optimize our petroleum wealth and boost our oil revenue
to its maximum limit without negatively affecting our
petroleum fields.

The main points are as follows:

First: The current oil production capacity of our offshore
and onshore fields is 2.3 million barrels per day with
about 60 billion cubic meters of gas. It is noteworthy
that most of the gas associated with our offshore and
onshore oil production is liquefied and sold through the
ADGAS plant (which produces gas from the offshore fields)
and the GASCO plant (which produces gas from the onshore
fields).

With the permission of Your Highness, I believe that it is
possible to raise our oil production capacity in the
medium-term to an average of 5 million barrels per day, and
sustain this for at least 20 years. We have huge oil
reserves -- the third largest in the world after Saudi
Arabia and Iraq -- and we represent more than 11 percent of
the world's total oil reserves.

Second: In order to increase the production capacity in Abu
Dhabi to 5 million barrels per day, we should take the
following into consideration:

1 - The plan should lead to a gradual increase in oil
production capacity as per the following table, which shows
the investment and the period required to achieve 5 million
barrels per day.
Production Capacity Total Investment By Year
(In millions barrel a day) (In $ billions)

3 1 2006

3.5 2 2008

4 3 2010

5 4 2014


2 - The goal of the plan should be to maintain a production
capacity of about 5 million barrels per day for 20 years
(2014-2034).

3 - The plan should focus on developing the Upper Zakum
field, which ZADCO currently manages, since the oil
reserves of the Upper Zakum field represent more than 28
percent of Abu Dhabi's known oil reserves.

The following table shows Abu Dhabi's current known oil
reserves distributed by field:

Name Total Reserves Total Extractable
(Million barrels Reserves
and condensate) (Million Barrels)

Onshore Fields

Murban 103,083 51,541.5

Offshore Areas 50,873 25,436.5
(Lower Zakum, Umm Shaif)

Upper Zakum 60,000 30,000

Other Offshore 6,955.4 3,477.7

Total Offshore 117,828.4 58,310.4

Total production 220,911.4 110,455.7
of Abu Dhabi Emirate

4 - It is necessary to seek assistance from companies with
significant experience and technical experience in oilfield
development. Such technology is available in the
international market.

5 - The plan should take advantage of cutting-edge,
proprietary technology in order to maximize oil extraction
above 50 percent.

6 - The plan should allow for the exploration and
development of areas that have not been surveyed
adequately. In light of the constant development of new
technologies in oilfield exploration, it also is necessary
to reconsider exploration of areas previously deemed to be
without commercially viable deposits.

7 - The plan also should focus on expanding production
capacity for offshore and onshore gas plants or building
new gas plants to receive the additional gas accompanying
the increased oil production (an increase from 2.3 million
barrels to 5 million barrels per day). Abu Dhabi has the
third largest gas reserves in the world after the former
USSR and Iran. Maximizing our gas production will multiply
our revenue consequently.

8 - Given the increase in oil production, condensates also
will increase -- perhaps to 500,000 barrels a day.
Condensates have about the same value as light crude.

The following table shows the gas reserves in Abu Dhabi
Emirate and other emirates:

(In trillions of cubic feet)

Emirate Associated Non-Associated Total
Abu Dhabi

ADCO 78.44 85.68 164.12

ADMA-OPCO 47.02 65.55 112.57

Other 19.64 10.27 29.91

Total 145.1 161.5 306.6
Abu Dhabi

Total 10.0 10.0 20.0
Dubai

Total 2.0 20.0 22.0
Sharjah

Others 2.0 4.0 6.0

Total UAE 159.1 195.5 354.6

Third: The developments in the oil market indicate an
expected drop in the oil supply during the next few years,
and a subsequent increase in oil prices. Abu Dhabi,
therefore, should be prepared to take advantage of this
situation:

1 - Abu Dhabi should make every attempt to fulfill the
market's demand for oil, as we cannot "sleep on huge oil
reserves" while the world is "dying of thirst for oil."

2 - Abu Dhabi should take advantage of the upward pressure
on prices during the coming period to maximize revenues.

3 - The following table shows approximate expected annual
revenue for Abu Dhabi Emirate during the 2006-2014
timeframe if the above-mentioned plan is implemented:

Year Production Est. Oil Price Est. Oil Revenue
(MB/Day) ($/Barrel) ($ Million/Day)

2006 3 30 32,850.00

2008 3.5 35 44,712.50

2010 4 38 55,480.00

2014 5 40 73,000.00

In addition, Abu Dhabi receives revenue from oil and gas
condensate, the sale of refined products and petrochemicals
-- the total value of these exports could reach $7 billion
by 2014.

This forecast does not take into consideration any
unforeseen circumstances; these figures therefore should be
revised on an annual basis.

I believe this study is just the start of what we could do
with our petroleum industry in a new world that is full of
changes.

Best regards,
Dr. Man'a Saeed Al Otaiba,
Special Advisor to His Highness the President

End of text.

Wahba