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Identifier
Created
Classification
Origin
04DJIBOUTI1443
2004-11-10 12:00:00
CONFIDENTIAL
Embassy Djibouti
Cable title:  

PROGRESS CONTINUES AT DORALEH PORT

Tags:   PREL  MARR  MOPS  EPET  ECON  EINV  EWWT  DJ  ET  TC 
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						C O N F I D E N T I A L SECTION 01 OF 02 DJIBOUTI 001443 

SIPDIS

STATE FOR AF, AF/E AND AF/RSA
STATE ALSO FOR EB
PARIS/LONDON FOR AFRICA WATCHER

E.O. 12958: DECL: 11/10/2014
TAGS: PREL MARR MOPS EPET ECON EINV EWWT DJ ET TC
SUBJECT: PROGRESS CONTINUES AT DORALEH PORT

Classified By: AMBASSADOR MARGUERITA D. RAGSDALE.
REASONS 1.4 (B) AND (D)



1. (C) Summary: Ambassador and Pol/Econoff visited the
construction site of the new port facility at Doraleh on
November 8 to track progress and obtain an update from the
port's project manager K.K. Menon of Emirates National Oil
Company (ENOC). Ambassador's last visit had taken place in
July. Doraleh's construction schedule has remained, for the
most part, on time and completion should be on schedule,
according to Menon. Menon and Ambassador discussed ENOC's
contract with Defense Energy Support Center (DESC) for fuel
tanks for use by the U.S. Navy, DESC tracking of port
construction, and the assessment that DESC may be interested
in leasing an additional four tanks to meet U.S. military
needs. Menon also noted progress made on the road connecting
the new port of Doraleh to the city of Djibouti and the main
route to Ethiopia. The new port is still considered by
Djibouti's government to be the country's gateway toward
becoming a Dubai in the Horn of Africa region. End summary.



--------------------------


Pylon Needs Have Changed


--------------------------





2. (U) The new port facility at Doraleh is coming along well.
Progress has been hampered slightly by difficulties with a
soft sea floor and pylon construction. Project Manager K.K.
Menon of Emirates National Oil Company (ENOC) said in the
initial survey of the sea terrain, the depth to reach hard
earth on the sea's floor was 40 to 50 meters. However, in
some areas soil firm enough to construct pylons was not found
until drilling to a depth of 60 to 70 meters. Menon
commented that this unexpected depth has caused the need for
longer pylons, which have been found in Turkey. Delays in
completion of construction on time will hinge on whether
these pylons will arrive on time. The only other difficulty
encountered in construction has been the constant need for
Argon gas and the lack of a reliable shipping agent for the
gas. ENOC's solution to this problem is to create an Argon
gas plant on site during construction, which would
subsequently be dismantled when the new port comes on line.



--------------------------


U.S. NAVY AS CUSTOMER


--------------------------





3. (C) Menon told Ambassador that a visit in October by a
Defense Logistics Agency (DLA) and Defense Energy Support
Center (DESC) team evaluated progress on construction of the
Phase I oil terminal at Doraleh, and specifically the four
tanks to be leased by DESC for the U.S. Navy. The team also
made a final needs assessment for the contract. Menon said
that the team indicated there might be a requirement for an
additional four oil tanks, making a total of eight. Another
topic discussed with the DLA/DESC team was the desired
completion date. According to Menon, DESC would like to
start the contract two months early (April, 2005 vice a
contract date of June, 2005) in order to facilitate a move
from facilities in Yemen at the expiration of the Yemeni
facility's contract. Menon commented that ENOC would not
commit to an early completion date but, still, is striving to
meet that date.



--------------------------


GETTING LOCAL OIL COMPANY BUY-IN


--------------------------





4. (SBU) The ongoing issue of oil companies Exxon-Mobil,
Shell and Total being required by the government of Djibouti
to move their operations to Doraleh was again raised as a
topic of discussion. Menon informed Ambassador that the
following day, November 9, the Director General of Djibouti's
Exxon-Mobil office was to visit the port. Menon did not
indicate whether the intent of the visit was to enter into
any discussion about leasing tanks or merely to get a closer
look. However, he stated that ENOC was not pressuring
companies to move because ENOC believes it would be
beneficial for Djibouti to have an alternative source for
oil. In Menon's opinion, the government's demand is based on
environmental reasons since tanks at the current port are
extremely old and do not have the leak prevention mechanisms
newer tanks have. At Doraleh, he said, the tanks are being
built with a system to monitor and detect any leaks that
might happen. Menon said this was unlikely because the tanks
are constructed with computerized equipment that ensure even
and thorough welding, and with a membrane beneath it to
prevent leaks entering the ground soil.



--------------------------


ETHIOPIA'S VESTED INTEREST


--------------------------





5. (SBU) Rumors of Ethiopian involvement in ownership of
Doraleh, or in the least contracting their own tanks at
Doraleh, are now leaning towards the latter. Menon told
Ambassador that a delegation from Ethiopia's petroleum and
trade ministries was to visit for three days later in the
week. Discussions have revealed that the Ethiopian
government is serious, according to Menon, but the question
of how long Ethiopia will take to commit remains.



6. (U) Whether Ethiopia contracts tanks for its proprietary
use or not, the road connecting Doraleh to the main truck
route is an important factor. Doraleh's construction
includes rebuilding of the road to the city and creation of a
connecting road to the existing truck route. Construction
started only recently but has been going smoothly and
quickly. Installation of fiberoptics underground for
utilities wiring will also be part of the road construction
project. Menon was fully confident the roads would be
completed on time and would not be an issue.



--------------------------


PERSONNEL RESOURCES AND DJIBOUTI


--------------------------





7. (U) In terms of employment, Doraleh is still bringing in a
large number of expatriate workers. The total number is now
around 620 persons, 30 percent of whom are Djiboutians. Most
of these Djiboutians are hired on a weekly basis in order to
spread the few jobs available over a large number of people
over time. Menon said for the actual operation of the port,
there will be a transition to permanent employees instead of
rotating weekly workers. Some will ultimately be hired from
the rosters of Exxon-Mobil, Shell and Total local operations.
Other Djiboutians who fit the education requirements will be
trained for six months to one year in Dubai and then begin
their jobs at Doraleh. Menon expected that there would 20 to
30 Djiboutians trained in the first wave.



--------------------------


COMMENT


--------------------------





8. (C) The remaining planned phases of Doraleh port have yet
to begin construction, although Menon indicated that work
would commence in the next few months. Phase 2, the
container terminal, still is expected to be operational in
September 2005. A Phase 3 project remains in planning stages
and a completion date has not been determined. Moreover,
ENOC plans now to reclaim part of the area attached to the
causeway for use as additional port space. Both the port's
principal local backer, businessman Abdurrahman Boreh, and
the Government of Djibouti seriously view the Doraleh project
as Djibouti's gateway toward becoming a Dubai in the Horn of
Africa region. Support from ENOC in this project -- and the
commitment of the U.S. Navy -- have helped galvanize their
sentiments. End comment.
RAGSDALE