QUEBEC NATURAL RESOURCE MINISTER ON SOFTWOOD,ENERGY

UNCLAS QUEBEC 000035

SIPDIS

SENSITIVE

DEPT PASS USDOC IMPORT ADMIN TERPSTRA
WHA/CAN - BREESE

E.O. 12958: N/A
TAGS: ETRD ENRG PREL PGOV EMIN CA
SUBJECT: QUEBEC NATURAL RESOURCE MINISTER ON SOFTWOOD,ENERGY

REF: 03 QUEBEC 233



1. (SBU) Summary: Natural Resources Minister Sam Hamad told
CG Keogh February 17 that a combination of allocation quotas at
a level of 35% and dropping the 48/52 split of the accumulating
duties as proposed by the U.S. would form the basis of a
softwood lumber deal. A substantial portion of the duties, if
not all, should be returned to Canada, he asserted. He also
told us that log validation was one of his main concerns and
stressed that the province was impatient to see a Quebec annex
published in the policy bulletin. Minister Hamad has asked to
meet the Ambassador when he visits Quebec in March and arrange a
working lunch and presentation on energy. He also requested
assistance in visiting the United States for exposure to U.S.
views and policies as a VOLVIS this summer. End Summary.

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Softwood Lumber
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2. (SBU) On February 17, CG Keogh and Pol Asst Nadeau met with
Sam Hamad, Quebec Natural Resources Minister, and his staff
director Jean Quenneville. Allocation of export quotas at the
historical level of 35%, or better, and an important slice of
the duties, if not all, instead of the current 52/48 proposal
favoring the U.S., would be a palatable solution and clinch a
softwood lumber deal tomorrow, asserted Hamad. He also
commented that log validation was one of his main focuses while
stressing that the province was impatient to see a Quebec annex
published in the final USDOC policy bulletin on lumber.

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Energy and Ambassador March Visit
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3. (SBU) Hamad proposed a working lunch with the Ambassador
March 23 in Quebec with a focus on energy security. The hold on
natural gas exploration in the Gulf of St Lawrence, because of
environmental concerns relating to sonar activity that disturbs
belugas and other marine life, did not preclude exploitation of
current known reserves. Hamad made it clear the hold was
temporary while other less invasive tests were developed for use
in exploration. However, negative public opinion remained a
factor, he stated. An immense pocket of gas, he named "Old
Harry," located between Newfoundland and Quebec's Ile
d'Anticosti, is even bigger than the Hibernia Project. Hamad
noted tht the oil sands in the Canadian West will run out in
about 30 years, so that other energy sources must be identified.


4. (SBU) The Minister added that he was working on a
broad-based national prosperity strategy on regional
development. He is looking to attract investments to Quebec
and getting more U.S. involvement, especially in the mining
sector. A new source of diamonds was discovered in Northern
Quebec at Mont Ottish two weeks ago by Ashton Mining. Ashton
is a small company and they are still in the exploration phase.
At this stage, it is a 50/50 partnership with Quebec government
agency SOQEM.

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VOLVIS Program
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5. (U) Sam Hamad expressed strong interest in participating in
an individual VOLVIS program in the US. He said the best timing
for him would be sometime in the summer, ideally in early July,
once the provincial legislature has recessed. In Washington
we suggested meetings at State, the Department of Energy, and
Commerce to discuss softwood lumber, as well as a trip to
Houston to look at the energy sector, California (Sacramento and
San Francisco) for wind energy and conservation practices.
Hamad was enthusiastic about going to Yale and Harvard
universities to meet with think tanks. He said his main areas
of interest would be energy policy, and renewable sources of
energy.


6. (SBU) Comment: Mr. Hamad was not entirely clear about what
he thought would be acceptable (and workable) "ballpark figures"
from Quebec's point of view to resolve the softwood lumber
impasse. There is obviously room for interpretation as well as
a continued strong desire to end the dispute.