CHINA AND ITALY TO STORE KUWAIT'S STRATEGIC

C O N F I D E N T I A L KUWAIT 004389

SIPDIS

STATE FOR NEA/ARPI, EB/ESC FOR GALLOGLY

E.O. 12958: DECL: 12/18/2014
TAGS: EPET ENRG PREL KU CH IT
SUBJECT: CHINA AND ITALY TO STORE KUWAIT'S STRATEGIC
RESERVE; GOK SEEKS THIRD LOCATION


Classified By: Ambassador Richard LeBaron for reasons 1.4 (b) and (d)


1. (C) A senior advisor to Prime Minister Shaykh Sabah
Al-Ahmed Al-Sabah told Poloff on December 15 that Kuwait had
concluded an agreement with China -- reportedly through a
China-based Chevron subsidiary -- for the storage of part of
its foreign-based "Strategic Petroleum Reserve," (SPR)
bolstering apparently existing storage capacity in Italy. He
said the GOK was "looking for a third location" and was
considering the possibility of approaching the United States
about storing part of the SPR in Alaska. The advisor said the
PM may raise the issue during his planned January or February
visit to the U.S. (Note: The advisor added that a formal
visit request will be forthcoming shortly. End Note.)


2. (C) The advisor was unable to provide numbers on the size
of the reserve, but said it was created by PM Shaykh Sabah as
a buffer to potential supply disruptions "should there be any
problems in the Straits of Hormuz."


3. (C) Comment: Kuwait maintains a domestic SPR, but this is
the most detailed description of a foreign-based SPR that
post has been privy to to date. The decision to store part
of the reserves in China makes both strategic and economic
sense; the PM has repeatedly stated his intent to realign
Kuwait's economy towards Asia, where demand for petroleum
products is expected to grow exponentially and indefinitely.
LEBARON