DOE WILLIAMSON DELEGATION VISITS KUWAIT

UNCLAS SECTION 01 OF 02 KUWAIT 002802 SIPDIS SENSITIVE DOE PLEASE PASS TO MWILLIAMSON AND JBRODMAN E.O. 12958: N/A TAGS: EINV EPET KU PREL OIL SECTOR SUBJECT: DOE WILLIAMSON DELEGATION VISITS KUWAIT REF: A. KUWAIT 02573 ¶B. STATE 107945 ¶1. (U) Summary. DOE officials Williamson and Brodman met on 21 June with Minister of Energy Shaykh Ahmed and other senior GOK energy officials. The delegation delivered a letter from Secretary Bodman inviting Shaykh Ahmed to meet with him in Washington and expressing the Secretary's interest in visiting Kuwait soon. The delegation, accompanied by Ambassador, also briefed GOK interlocutors on their Secretary's recent foreign travel; outlined the proposed U.S. energy bill; clarified the Administration's position on the so-called "NOPEC" amendment; and discussed developments regarding mega energy projects Al-Zour North and Project Kuwait, of major interest to U.S. firms. GOK officials were sanguine about prospects for early closure on these energy projects. This evaluation was not shared by senior executives from nine major energy and engineering firms attending a luncheon hosted by Ambassador in honor of the DOE team. End Summary. ¶2. (U) Department of Energy Senior Foreign Policy Advisor Molly Williamson and Deputy Assistant Secretary for International Energy Policy John Brodman met on 21 June in Kuwait with Minister of Energy H.E. Shaykh Ahmed Fahd Al- Ahmad Al-Sabah, Ministry of Energy Assistant Undersecretary for Planning Yousif Mohammad Al-Hajeri, Kuwait Petroleum Company (KPC) Managing Director for Marketing Jamal Al-Nouri, and Chairman of Altanmia Oil Development Company Ahmad Al-Arbeed. Ambassador LeBaron joined for the KPC and Minister meetings and hosted a luncheon at his residence attended by nine energy and engineering industry representatives with operations in Kuwait. Firms represented included ExxonMobil, Chevron, Parsons Brinckerhoff and Engineering, Fluor, Halliburton, Equate and Saudi Arabian Texaco. ¶3. (U) At each of the GOK meetings, Ms. Williamson and Mr. Brodman raised the Project Kuwait development program for the northern oil fields and the Al Zour North electrical power generation project. Kuwaiti interlocutors were uniformly optimistic about prospects for these proposals although the projects' timetables continue to slip somewhat. ¶4. (SBU) Both Energy Minister Shaykh Ahmed and Mr. Ahmad Al-Arbeed -- head of the newly established Altanmia Oil Development Company, created as the interface between the GOK and the international oil companies (IOCs) -- thought it unlikely that Project Kuwait legislation would receive full parliamentary approval this term. The government- backed proposal for Project Kuwait was passed unanimously by the Economic and Financial Affairs Committee on 8 June and now is ready for consideration by the full legislature. However, the National Assembly is scheduled to close on 28 June to reconvene in mid October. Given this, our interlocutors laid out the following timeline for Project Kuwait: the National Assembly reconvenes in mid October with endorsement of the GOK proposals expected by mid November, with a special session of the Assembly, if required; the actual tendering process will take another six to nine months; the contract could be let by June 2006; the IOCs' assumption of responsibilities would commence soon thereafter. ¶5. (SBU) As for the Al Zour North power production project, Minister of Energy Shaykh Ahmed and Undersecretary for Planning Yousif Mohammad Al-Hajeri reported that GOK legal experts are reviewing the pre-qualification tender document and clarifying specifications based on recommendations from the concerned consortia. They predicted this timeline for the process: legal review and the selection of a short list of perhaps five pre- qualified bidders completed by September 2005; tendering process to take another six to nine months with the primary contractor selected by the summer of 2006, with construction to start then. Shaykh Ahmed noted that he had met with a group of U.S. firms recently and he had the impression that they had left the meeting satisfied with the answers provided to their concerns about certain terms and conditions of the project. (Note: Industry sources are considerably less sanguine about the timelines for Al-Zour North and Project Kuwait. At the Ambassador's luncheon, energy firm representatives uniformly described the GOK's timetables as unrealistic and unachievable based on their past experience with the Ministry of Energy and major projects. Consensus opinion was that it could be well into 2007 before either project would be initiated on the ground. End note.) ¶6. (SBU) Senior Advisor Williamson delivered a personal letter to Shaykh Ahmed from Secretary of Energy Samuel Bodman. The Minister was genuinely pleased to receive this communication and the invitation to dine with the Secretary during Shaykh Ahmed's 29 June - 1 July visit to SIPDIS Washington as a member of the delegation accompanying Prime Minister H.H. Shaykh Sabah Al-Ahmad Al-Jaber Al- Sabah. Scheduling of that meeting will be clarified as the delegation's travel schedule develops, although it appears that a lunch on the 29th, as proposed by DOE, may not be possible for the Energy Minister. Shaykh Ahmed received warmly the news that Secretary Bodman hopes to visit Kuwait before the end of 2005; he extended an early welcome in anticipation of that event. Ms. Williamson and Mr. Brodman also briefed Shaykh Ahmed in some detail on Secretary Bodman's thoughts developed during his recent SIPDIS trip to Moscow, Baku and Kiev. Also discussed was the Secretary's opening of the U.S.-Indian Energy Dialogue SIPDIS with Indian co-chair Montek Ahluwalia. Ms. Williamson further briefed Shaykh Ahmed on the pending U.S. energy bill, sharing with him background on the bill's provisions and the Administration's expectations for what it will accomplish. Ms. Williamson explained the Administration's position on the so-called "NOPEC" amendment, which the Minister had heard about and was satisfied with our explanation and belief that the amendment would not survive markup. LEBARON