Identifier
Created
Classification
Origin
05KUWAIT3173
2005-07-18 10:12:00
CONFIDENTIAL
Embassy Kuwait
Cable title:  

MIN ENERGY UNDERSECRETARY ON OIL PRICES AND ENERGY

Tags:  EPET ENRG PINR KU OIL SECTOR 
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This record is a partial extract of the original cable. The full text of the original cable is not available.
C O N F I D E N T I A L SECTION 01 OF 02 KUWAIT 003173 

SIPDIS

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

E.O. 12958: DECL: 07/18/2015
TAGS: EPET ENRG PINR KU OIL SECTOR
SUBJECT: MIN ENERGY UNDERSECRETARY ON OIL PRICES AND ENERGY
COOPERATION

REF: KUWAIT 0943

Classified By: CDA Matthew Tueller for reason 1.4 (b)

C O N F I D E N T I A L SECTION 01 OF 02 KUWAIT 003173

SIPDIS

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

E.O. 12958: DECL: 07/18/2015
TAGS: EPET ENRG PINR KU OIL SECTOR
SUBJECT: MIN ENERGY UNDERSECRETARY ON OIL PRICES AND ENERGY
COOPERATION

REF: KUWAIT 0943

Classified By: CDA Matthew Tueller for reason 1.4 (b)


1. (C) At a July 16 meeting with Charge, Ministry of Energy
Undersecretary Issa Al-Own voiced his concerns about the
"NOPEC" legislation and described three problems keeping
world oil prices high: lack of refining capacity; market
uncertainty in major producing countries such as Iraq and
Venezuela; and traders who are continuously betting on higher
prices. He asked for increased cooperation and dialogue on
energy issues with U.S. counterparts, and described a newly
proposed "GCC Center for Strategic Studies" that would act as
an "energy think tank" and look at how the energy sector
affects overall development in the GCC. Al-Own will attend
an energy conference in Houston in late September and hopes
to stop in Washington for meetings with DOE counterparts to
discuss a periodic dialogue. When Al-Own noted the
difficulties on engaging with Iran on energy issues, Charge
emphasized our concerns about Iran's nuclear ambitions and
noted that it should also be of concern to Iran's neighbors.

Concerned About "NOPEC"
--------------


2. (C) Charge met July 16 with Ministry of Energy
Undersecretary Issa Al-Own per Al-Own's request to "chat"
about a number of issues. (Note: Al-Own also raised his
son's pending student visa, which would allow him to finish
his last year of college.) Also joining the meeting was Econ
Officer and Ministry of Energy Director of Planning and
International Relations Ahmad Al-Sairafi. Al-Own started the
conversation by noting his, and the GOK's, concern about the
"NOPEC" legislation recently introduced in the U.S., allowing
for anti-trust lawsuits against OPEC countries. He said that
the issue would be raised at the upcoming July meeting of the
OPEC Strategic Committee and that there was "concern among
committee members." Al-Own said that he thought that OPEC
had become a "positive factor in oil prices" and added that
"(previous) positions held by countries like Iran and Libya
were not sustainable" or realistic. He said that the

Strategic Committee would present its long term strategy to
OPEC by the end of the year.

Why Oil Prices Are High
--------------


3. (SBU) Al-Own identified three specific reasons for the
current high oil prices. First, he said, is the lack of
refining capacity in the U.S. and other consumer countries.
In this context, he noted that Kuwait plans to have its
fourth refinery come online by 2009, with a daily refining
capacity of 600,000 barrels. The second reason for the high
oil prices, he said, is the uncertainty surrounding some of
the major producing countries, such as Iraq and Venezuela.
He estimated that it would take Iraq ten years to became a
major producer, and that the country would not produce much
more than 2.5 mbpd until then. The third reason he cited for
high oil prices was that oil was being traded as a commodity
and "the traders are keeping prices high." He asked
rhetorically, "How can 160 mbpd be traded on world markets,
when only 80 mbpd is consumed and produced?"

Increased Energy Dialogue: Bilat Meetings and "Strategic
Studies Center"
-------------- --------------


4. (C) On the topic of increasing dialogue between consuming
and producing nations, Al-Own said that the Ministry of
Energy was already having annual meetings with UK
counterparts, and that this was initiated through the British
Embassy in Kuwait. He said that the MoE would like to start
the same type of ongoing dialogue with the U.S. Department of
Energy, starting with a MoE trip to Washington. At the same
time, Al-Own said, the GOK was hoping to soon formalize a new
"GCC Center for Strategic Studies", which would act as an
"energy think tank" for the GCC. The Ministry of Energy was
hoping to locate the headquarters of this new Center in
Kuwait, but he said that Saudi Arabia also wanted to host it.
The compromise might be to host the strategic part in Kuwait
and the technical part in the KSA, he said. He described
this proposed Center as "the best way to deal with the
challenges of the oil and gas sector" and said that it would
"provide support to decision makers throughout the GCC."


5. (C) While Al-Own said that the Center would be for the
whole GCC, he added that it was largely backed by the four
countries with the most oil and gas resources: KSA, Kuwait,
UAE and Qatar. He said that the backers of the Center had
already met with a number of international think tanks and
academic institutions and asked them to participate, and that
he was most impressed with the Center for Strategic and
International Studies (CSIS). He said that one or more of
these think tanks would be given a consulting contract and
that the core team of researchers would be from the GCC.
Al-Own said that the proposal for the Center would be
presented to the appropriate GCC ministers in September or
October and then to the GCC leadership in December for final
approval. Al-Own asked for Embassy support for the Center,
specifically in helping to attract American think tanks to
become involved.

Iran: Money for Al-Durra, But Waiting on Political Deal
-------------- --------------


6. (C) When asked about Kuwait's energy negotiations with
Iran, Al-Own said that he has been given a budget each year
for the past three years to drill for gas in the offshore
Al-Durra field (reftel),but that he could not go ahead
without the two sides coming to a political settlement over
the continental shelf boundaries between Iran and Kuwait. He
added that the Ministry of Energy has asked Foreign Minister
Shaykh Dr. Mohammad Al-Sabah for engagement with Iran on this
issue, but he has not seen any recent movement. Charge
emphasized USG concerns about Iran's nuclear ambitions and
noted that it should also be of concern to Iran's neighbors,
especially from an environmental perspective.

Bio Data, and the Story of Grandmother and the Picture of
Bush Sr.
-------------- --------------


7. (SBU) Al-Own is a graduate of Iowa State University, and
has a son currently finishing his Chemical Engineering degree
at the University of Ohio, Youngstown. He speaks excellent
English. At this meeting, in an aside comment, Al-Own said
that "the Kuwaiti people have a true belief that the U.S.
(military) presence in this region is a factor for
stability." He then went on to tell a story about his
deceased grandmother. After the U.S. liberated Kuwait during
the Gulf War, Al-Own's grandmother put a picture of President
George Bush Sr. up on her wall. She kept it there for many
years, and she told her children, "When I die, do not take
that picture down." She passed away a few years ago, Al-Own
said, but while he has renovated her old room and changed
everything else, he has left that picture there, "because she
asked us to."

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