C O N F I D E N T I A L ABU DHABI 003237

SIPDIS

DEPT FOR NEA/ARPI, EB/ESC/TFS, EB/ESC/IEC

E.O. 12958: DECL: 07/20/2015
TAGS: EPET BEXP ENRG ECON PREL IR TC
SUBJECT: SAJGAS IPO AND IRANIAN GAS

REF: A. ABU DHABI 634

B. DUBAI 265 AND PREVIOUS

Classified By: Ambassador Michele J. Sison for reasons 1.4 (b and d)


1. (U) This is an action request. Please see para. 5.


2. (C) Dow Jones Correspondent Simeon Kerr (protect)
telephoned EconChief on July 23 and July 24 to say that
Crescent Petroleum and the Emirate of Sharjah planned to
issue an initial public offering (IPO) in September for their
SajGas project to pipe Iranian gas to the UAE. According to
Kerr, the IPO will be for a 32 percent stake in a new company
that combines the assets of the pipeline, gas processing, and
gas provider. Crescent Petroleum will be the lead investor
in this new company (to be named Dana Gas). Other investors
include Kuwaitis, Saudis, Abu Dhabi and the Bahraini royal
court. Kerr said that Crescent is "bringing on board"
important and influential investors to ensure that the
project can go through. Kerr added that the IPO would be
open to foreign investment. The lead arranger for the IPO
will be HSBC.


3. (C) According to Kerr, the IPO is still very "hush hush"
out of concern for U.S. opposition to any investments in
Iranian gas, but he "had seen papers" describing the
proposal. Kerr said that the deal makes economic sense for
Dubai and the northern Emirates. It diversifies the source
of supply, will be available before Dolphin gas from Qatar,
and will be very "cheap." Kerr also speculated that the Abu
Dhabi leadership's opposition to the project had been
overcome when the Emirate of Dubai contracted to buy Dolphin
gas. "Dolphin's equities (and by extension Abu Dhabi's
equities) are being taken care of" now the project can move
forward.


4. (C) Comment: The UAE demand for energy is increasing
rapidly with the growing population and economic development
plans. Crescent's SajGas project is a multi-million dollar
project to bring gas to the northern emirates. This project
appears to be moving forward despite the Abu Dhabi
leadership's long standing stated opposition. In February,
MinEnergy Mohammed bin Dha'en Al-Hamili told us that the UAEG
had a contract with Crescent Petroleum to purchase gas from
the offshore Mubarak field, but stressed that the UAEG had
signed a contract to purchase gas from Sharjah, not Iran.
(ref A) The problem, he explained, is that the Mubarak
field, which lies near the Iranian controlled, and UAE
claimed Island, of Abu Musa, is shared by Iran and Sharjah
and Crescent's concession crosses into Iran. (Note: Each
emirate in the UAE controls it own oil and gas resources.)
Crescent's silence gives Sharjah and the UAEG a certain
amount of "plausible deniability." End Comment


5. (SBU) Action Request: Post requests updated points that
we can use both with UAEG and Sharjah emirate authorities to
express our concern and we seek more information at the
federal and Sharjah emirate level. End Action Request.
SISON