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