QATAR REPORTEDLY AGREES ON NATURAL GAS PIPELINE TO

C O N F I D E N T I A L MANAMA 000692

SIPDIS

E.O. 12958: DECL: 05/11/2015
TAGS: ENRG EPET ETTC PBTS BA
SUBJECT: QATAR REPORTEDLY AGREES ON NATURAL GAS PIPELINE TO
BAHRAIN

REF: STATE 83661

Classified By: Classified by Ambassador William T. Monroe for reasons
1.4 (b) and (d).


1. (U) The Bahrain press, quoting unnamed sources, reported
May 5 that, after months of discussions, Qatar has agreed to
supply Bahrain with natural gas via pipeline. One press
source reported that the framework agreement called for
expected imports of 500-1,000 million cubic feet per day over
a 25-year period.


2. (C) Crown Prince Salman Al-Khalifa heads the Bahraini
side in the discussions on the gas project. At the end of
NEA PDAS Cheney's May 10 meeting with the Crown Prince, the
Ambassador asked about the gas deal. Shaykh Salman confirmed
that agreement has been reached to proceed with the project,
and termed this a significant development. At the same time,
he said that the actual contract to construct the pipeline
has not been signed. He said that he expected the pipeline
would become operational within 2-3 years. When pressed for
details on the company or companies involved, he said that
would be up to the Qataris to decide.


3. (C) The Ambassador met with Minister of Oil Shaikh Isa
bin Ali Al Khalifa May 11 to deliver reftel points on Kuwait
gas options and ILSA concerns, and to ask if the positive
news on Qatar-Bahrain pipeline might give a boost to the
Qatar-Kuwait pipeline. Al Khalifa said Bahrain and the U.S.
are like-minded on the question of importing gas from Iran,
and said that the GOB is supportive of a pipeline from Qatar
to Kuwait passing through Bahraini waters. While not
directly involved in the Qatar-Bahrain pipeline discussions,
he said that he thought the Qatar-Kuwait pipeline could be a
separate pipeline or could be an extension of the
Qatar-Bahrain pipeline. He guessed that Kuwait negotiations
with Iran might be simply a tactic to put pressure on the
Qataris, similar to what the GOB had done in the past. The
Ambassador asked that the GOB encourage development of the
Qatar-Kuwait pipeline.


4. (C) The Ambassador asked Shaikh Isa if there had been any
progress in efforts to restore the 50,000 barrel per day
Saudi oil grant to Bahrain that expired in mid-2004. The
Minister said Saudi Arabia had still not responded to the
GOB's request to restore the grant, but that current high oil
prices were compensating for the loss. Shaikh Isa also noted
that Bahrain had originally requested to purchase natural gas
from Saudi Arabia but, according to the Saudis, they did have
any excess gas for sale.


5. (C) Comment: We defer to Embassy Qatar on exactly how
imminent construction of the Qatar-Bahrain pipeline is, but
the government of Bahrain is treating this new "agreement" as
an important step forward. The gas is badly needed if
Bahrain is to meet its industrial development ambitions, most
notably further expansion of the Alba aluminum facility and
other projects requiring significant energy input.
MONROE