AMBASSADOR CALLS ON NEWLY-APPOINTED NATIONAL OIL

C O N F I D E N T I A L SECTION 01 OF 02 MANAMA 001601 SIPDIS NEA/ARPI NSC FOR CHASE HUTTO E.O. 12958: DECL: 10/23/2015 TAGS: ENRG EPET ETRD ECON BA SUBJECT: AMBASSADOR CALLS ON NEWLY-APPOINTED NATIONAL OIL AND GAS AUTHORITY CHAIRMAN REF: A. MANAMA 816 ¶B. DOHA 934 Classified By: Ambassador William T. Monroe, reasons 1.4 (b) and (d) -------------- SUMMARY -------------- ¶1. (C) The Ambassador called on newly-appointed National Oil and Gas Authority (NOGA) Chairman Dr. Abdul Hussain Ali Mirza October 24. NOGA replaces the Ministry of Oil and has been established by the GOB to manage the government's oil portfolio. Mirza said that he planned to commission a fresh examination of geological data in the hope of discovering new Bahraini crude oil deposits. He said Bahrain would need to import gas to meet future gas and power demands dictated by industrial expansion plans and was hopeful that a proposed Qatar-Bahrain gas pipeline would help meet that need. Mirza said partial privatization of Bahrain's oil and gas industry is among the topics to be considered by NOGA's seven-member board of directors. End Summary. -------------- OIL AND GAS PORTFOLIO HIGHLIGHTED -------------- ¶2. (U) In a reshuffling of the cabinet September 29, Minister of State Mirza Hussain Ali Mirza was named Chairman of the newly-formed NOGA. The Prime Minister said in a statement that the reshuffle would enhance the Kingdom's achievements in the oil and industrial sectors and would generate more income for the state. NOGA replaces the Ministry of Oil and has been established by the GOB to manage the government's oil portfolio. The Oil Ministry's staff will transfer to NOGA and Mirza will be an ex-oficio member of the Economic Development Board. ¶3. (U) The GOB's oil portfolio currently includes: 100 percent of the Bahrain Petroleum Company (BAPCO); 75 percent of Bahrain National Gas Company (Banagas) with the remaining 25 percent held by Caltex; 33 percent of Gulf Petrochemical (GPIC) with 67 percent split evenly between Saudi Arabia and Kuwait; and 60 percent of Bahrain Aviation Fuel Company (BAFCO) with 23 percent held by Caltex, and 17 percent held by British Petroleum. -------------- FRESH SOURCES OF CRUDE AND GAS SOUGHT -------------- ¶4. (SBU) Mirza told the Ambassador October 24 that he planned to commission a fresh examination of geological data in the hope of discovering new Bahraini crude oil deposits. He added that this might lead to the development of joint ventures with American companies, e.g. Chevron, which has a historical relationship with Bahrain, to conduct new offshore exploration. Pointing to a large geological survey map on his wall, he questioned how Bahrain could be surrounded by such rich deposits and yet be as scarcely endowed as existing surveys indicated. "If we manage to make another off-shore discovery, it will open a lot of possibilities," he said. ¶5. (SBU) Mirza said he would seek not only to maximize Bahrain's existing resources and refining capacity, but to expand them. He said that given Bahrain's current gas production level of one billion cubic feet per day, domestic supply is sufficient to meet the Kingdom's current needs. However, Bahrain would need to import gas to meet future gas and power demands dictated by industrial expansion plans. ¶6. (C) He said a proposed gas pipeline from Qatar would be a valuable source of natural gas needed to meet future demand. The Ambassador asked how strong was the commitment of Qatar to supply gas to Bahrain. Mirza noted that Qatar holds the third largest gas reserves in the world and said it was his impression was that the Qatari government viewed a Qatar-Bahrain pipeline favorably. (Note. This echoes sentiments previously expressed by Minister of Industry and Finance Hassan Fakhro and former Foreign Minister Shaikh Mohammed bin Mubarak Al-Khalifa, as reported in Ref. A. End note.) Mirza said he was accompanying the Crown Prince on a visit to Qatar that evening and that the pipeline would likely be a key topic of discussion. -------------- PRIVITIZATION -------------- ¶7. (C) Regarding debate recently carried in the local press over the possible privatization of Bahrain's oil and gas industry, Mirza said, "it has to be done." He acknowledged public fears that privatization could lead to a loss of jobs, but said that at least some oil company assets would need to be privatized, though this would take some time. ¶8. (SBU) Mirza said privatization of the industry is among the topics to be considered by NOGA's seven-member board of directors, the remaining members of which have yet to be appointed. Mirza said at least one member could be drawn from a major oil company. The King, the Crown Prince and the Prime Minister would need to approve the board's membership. MONROE