KPC CHIEF ON IMPLEMENTATION OF GOK KATRINA AID

UNCLAS KUWAIT 004146 SIPDIS SENSITIVE STATE FOR NEA/ARPI AND KATRINA WORKING GROUP E.O. 12958: N/A TAGS: AEMR EAID PREL ENRG KU US SUBJECT: KPC CHIEF ON IMPLEMENTATION OF GOK KATRINA AID (PETROLEUM PRODUCTS) REF: KUWAIT 4050 Sensitive but Unclassified; Protect accordingly. Not for Internet distribution. ¶1. During a September 20 meeting with Ambassador, Kuwait Petroleum Corporation CEO Hani Hussain, offered further clarification of GOK intentions on mechanisms for distribution of petroleum product assistance connected to Hurricane Katrina relief, specifically on the pricing of the $100 million of jet fuel for OIF use. The Ambassador confirmed with Hussain that the current understanding was that $400 million in petroleum product aid would consist of $100 million in jet fuel for OIF use and $300 million in petroleum products for Katrina relief in the U.S. ¶2. Hussain agreed to the Ambassador's recommendation that KPC and DESC begin discussions on contractual arrangements for the $100 million in jet fuel. He said that the jet fuel would be calculated at market price (as opposed to the concessionary price under which DESC is currently purchasing 800,000 gallons per day). (Embassy ECON has been in touch subsequently with officials at DESC and the KPC Marketing Office, and they have agreed to initiate contact.) Ambassador noted to Hussain that we are well aware that the Kuwaiti National Assembly needs to approve the overall aid package before any arrangement can be finalized, but it makes sense to discuss modalities now. ¶3. On the $300 million in petroleum products for the U.S., Ambassador provided Hussain a copy of the NSC paper detailing USG dispersal modalities, recommending that it would be more efficient for the GOK to sell the product and then provide the proceeds as a cash grant. Hussain was noncommittal on this mechanism, noting that the GOK wanted its aid to have some visible impact. He said he would need to consult further with the Minister of Energy on this portion of the aid. Ambassador agreed that the U.S. and GOK should work together to make sure that the various elements of the GOK donation receive recognition in the U.S., but noted the relative efficiency of introducing cash into the aid effort as opposed to figuring out modalities to accept free product. ******************************************** Visit Embassy Kuwait's Classified Website: http://www.state.sgov.gov/p/nea/kuwait/ ******************************************** LEBARON