UAE-QATAR DOLPHIN PROJECT UNDER FIRE FROM SAUDI

C O N F I D E N T I A L ABU DHABI 002875 SIPDIS SIPDIS DEPT FOR NEA/ARP E.O. 12958: DECL: 07/12/2016 TAGS: PREL EPET SA QA AE SUBJECT: UAE-QATAR DOLPHIN PROJECT UNDER FIRE FROM SAUDI ARABIA REF: A. ABU DHABI 191 ¶B. 05 ABU DHABI 3851 Classified By: Ambassador Michele J. Sison for reasons 1.4 b and d. ¶1. (C) Summary. The UAE-Saudi border dispute continues, albeit largely out of the public eye. Saudi Arabia claims that the Dolphin pipeline that will bring natural gas from Qatar to UAE crosses Saudi territory. As such, the SAG recently sent letters of complaint to the relevant governments, Dolphin's contractors, and the banking consortium financing the project. The Governments of the UAE and Saudi Arabia have made few public comments about the border dispute in recent months, and it is unclear whether the SAG's letters are intended to put pressure on the UAE and Qatar, or are just responding to the UAE's earlier public statements about its territorial boundaries (ref A). End summary. ¶2. (U) On July 12, the UAE press covered the story about the Saudi-UAE-Qatari dispute over the Dolphin natural gas pipeline from Qatar to the UAE. The press cites Bloomberg reporting that the Saudi government sent a memo to the National Bank of Abu Dhabi (NBAD, one of the financiers) protesting that the pipeline infringes on its borders. The press quotes the July 8 memo saying that the pipeline crosses Saudi territory and "cannot be constructed without the agreement of the kingdom," which has not been given. The UAE press also cites Dolphin Energy's response that it "has not received any objection or protest from any country concerning the pipeline project that runs exclusively through the maritime areas of the states of the UAE and Qatar." ¶3. (C) Econchief spoke to Michael Ladenburg (protect) Head of Corporate Banking at NBAD, who was quoted in the press acknowledging receipt of the letter from the Saudi Government. Ladenburg said that the Abu Dhabi Executive Council (the Emirate of Abu Dhabi's cabinet) was "pissed" that he had admitted the existence of the letter to the press, since no one else was admitting its existence. He added, however, that the Bloomberg reporter had read him the text of the letter "verbatim" during their phone conversation. He thought that the only professional response was to admit the existence of the letter and decline to comment further. Ladenburg added that it was clear that Saudi Embassies were instructed to deliver the same letter to all members of the banking consortium on the same day. As the banks in Japan, Europe and Canada came on line, they all expressed their concerns. ¶4. (C) In June Econchief and Econoff discussed an earlier letter that the Saudi Government sent to Occidental Petroleum (a copy of which, the SAG faxed to the U.S. Embassy in Riyadh) with Occidental Petroleum General Manager David Scott. That letter also notes that the pipeline would pass through an area over which the Saudi government has sovereignty. Scott commented that the SAG had apparently sent similar letters to all of the contracting companies involved in the Dolphin project and to the governments of UAE and Qatar. During the meeting, Scott said that his company's position was that it had the legal right to build the pipeline and that it would leave any political arguments to the governments of the countries involved (i.e., Saudi Arabia, Qatar, and the UAE). From a practical matter, he noted, the pipeline was in an advanced stage of construction and had been built outside of any possible disputed area. (Note: Scott is out of the country and was not available for comment.) ¶5. (C) Comment: The UAE-Saudi border dispute has been simmering quietly for several months, with few public comments since the UAE published its annual yearbook redrawing its border to show it connecting with Qatar and publicly stating the UAE's position that the 1974 border agreement should be reviewed. (Ref A). Our understanding is that there has been no progress in resolving this dispute. The Saudis appear to be ratcheting up the pressure on the various companies involved in the project. Whether they are using this to put additional pressure on the UAE and Qatar or are just responding to earlier public statements from the UAE is unclear. Judging by the careful public responses from Dolphin, it appears as if the UAE strategy is to play down the dispute publicly and move forward on the pipeline. End Comment. SISON