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)

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SUMMARY
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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.

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OIL AND GAS PORTFOLIO HIGHLIGHTED
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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.

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FRESH SOURCES OF CRUDE AND GAS SOUGHT
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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.

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PRIVITIZATION
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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