KUWAIT-IRAN GAS - A DONE DEAL

C O N F I D E N T I A L KUWAIT 001089

SIPDIS

STATE PLEASE PASS DEPARTMENT OF ENERGY FOR IE
STATE FOR NEA/ARPI
EB/ESC/IEC FOR GALLOGLY, DOWDY, MCMANUS

E.O. 12958: DECL: 03/17/2015
TAGS: ENRG EPET KU IR KUWAIT IRAN RELATIONS OIL SECTOR
SUBJECT: KUWAIT-IRAN GAS - A DONE DEAL

REF: A. KUWAIT 0943


B. 2004 STATE 166919

Classified By: Economic Counselor Stephen Carrig for reason 1.4 (d)


1. (C) Econ Counselor and Econ Officer met March 12 with
Ministry of Energy Undersecretary Issa Al-Own to follow up on
earlier discussions of Kuwait's options for meeting its gas
needs (Ref A). Al-Own said that there was a "good chance"
that Kuwait and Iran might discuss a potential gas export
deal on the sidelines of the Isfahan OPEC meeting. Clarifying
a March 12 newspaper report on the deal, Al-Own said that the
two sides had come to an agreement on some "outstanding
technical points" already and that they could now "resume
negotiations." He said that the plan called for a pipeline
to carry 300 million cubic feet (mft3)/day and that the two
sides would likely look for a private investor to build the
pipeline.


2. (C) Al-Own pointed out that Kuwait would face critical
gas needs in 2008, once Kuwait's new petrochemical plants
come online. With an estimated one year of design and two
years of construction needed for the pipeline, Al-Own said
that Kuwait would like to move the Iran deal forward "like a
rocket." Al-Own continued that the disputed Al-Durra
offshore gas field (Ref A) was "really a border issue" and
that the Foreign Ministry was actively trying to resolve the
dispute through diplomatic channels. He said that, once the
Foreign Ministry gives the go-ahead, the Ministry of Energy
would beging drilling in the Al-Durrah field.


3. (U) March 14 newspapers quoted unnamed sources as saying
that Minister of Energy Shaykh Ahmed Fahd Al-Ahmed Al-Sabah
is expected to sign a memorandum of understanding on the gas
deal while at Isfahan and the Energy Minister himself was
quoted on his departure as saying that Kuwait and Iran "will
complete negotiations and I hope to reach an understanding
during this visit" regarding the import of 300 mft3/day of
Iranian gas. (Note: March 16 online news sources reported
that the two countries had signed a $7 billion, 25-year MOU
March 15 for Iran to export 300 mft3/day of gas daily to
Kuwait, starting in 2007.)
LEBARON