DOE WILLIAMSON DELEGATION VISITS KUWAIT

UNCLAS SECTION 01 OF 02 KUWAIT 002802

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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

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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

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trip to Moscow, Baku and Kiev. Also discussed was the
Secretary's opening of the U.S.-Indian Energy Dialogue

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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