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.



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LEBARON