Identifier
Created
Classification
Origin
06KUWAIT841
2006-03-13 08:36:00
CONFIDENTIAL
Embassy Kuwait
Cable title:  

AMBASSADOR'S ATTEMPTS TO TIE DOWN CONCESSIONARY

Tags:  EPET PREL ECON MOPS KU IZ 
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130836Z Mar 06
C O N F I D E N T I A L SECTION 01 OF 02 KUWAIT 000841 

SIPDIS

FOR NEA/ARP AND EB, LONDON FOR TSOU, PARIS FOR ZEYA
OSD FOR PAUL HULLEY

E.O. 12958: DECL: 03/15/2016
TAGS: EPET PREL ECON MOPS KU IZ
SUBJECT: AMBASSADOR'S ATTEMPTS TO TIE DOWN CONCESSIONARY
OIF FUEL SUPPLY WITH FOREIGN MINISTER AND KPC CEO


Classified By: Ambassador Richard LeBaron for reasons 1.4 (b) and (d)

C O N F I D E N T I A L SECTION 01 OF 02 KUWAIT 000841

SIPDIS

FOR NEA/ARP AND EB, LONDON FOR TSOU, PARIS FOR ZEYA
OSD FOR PAUL HULLEY

E.O. 12958: DECL: 03/15/2016
TAGS: EPET PREL ECON MOPS KU IZ
SUBJECT: AMBASSADOR'S ATTEMPTS TO TIE DOWN CONCESSIONARY
OIF FUEL SUPPLY WITH FOREIGN MINISTER AND KPC CEO


Classified By: Ambassador Richard LeBaron for reasons 1.4 (b) and (d)


1. (C) Foreign Minister Shaykh Dr. Mohammed Al-Salem
Al-Sabah told the Ambassador March 8 that the GOK has
instructed Kuwait Petroleum Corporation (KPC) to renew the
Operation Iraqi Freedom (OIF) fuel contract and urged that
U.S. negotiators meet with KPC representatives. Shaykh Dr.
Mohammed added, however, that Minister of Energy Shaykh Ahmed
Al-Fahd Al-Sabah had some new ideas regarding pricing,
intimating that the current concessionary prices could
change. The FM would not comment on the length of renewal
when pressed by the Ambassador. The meeting came the day
after the Ambassador sent an interagency-approved letter to
the FM requesting the continuation of concessionary pricing
for jet fuel provided to U.S. forces in Kuwait for use in
OIF. (Text of letter is included for the record in para 5.)


2. (C) The Ambassador called on KPC CEO Hani Hussain on
March 12 to follow up, after hearing that DESC's KPC
negotiating partners still had not received instructions on
terms of a new contract. The Ambassador noted that is was
not so much a questions of DESC and KPC negotiating as it was
a political question that needed to be answered by the GOK on
the pricing and contract duration for OIF fuel. The
Ambassador provided Hussain with the details of his
conversation with the Foreign Minister and said that the U.S.
preference was to maintain the existing terms of the contract
for at least one more year.


3. (C) Hussain said that the Cabinet had made the decision
to extend the concessionary price through the end of March
but that KPC could not take any action to extend it further
without explicit instructions from the GOK. He said that the
Energy Minister was currently out of the country but that he
was expected to return on the evening of March 12, at which
point Hussain promised he would raise it with the Minister.
The Ambassador thanked Hussain for his involvement and
pointed out that, beside the cost of the fuel, another
critical element for the U.S. military is the certainty of
supply and that all sides would be best served by settling on
a new contract as soon as possible.

Next Steps
--------------


4. (SBU) The ball is in Hussain's court to get back to the
Ambassador. If we don't hear from him in the next few days,
we will re-engage.

Text of Letter to Foreign Minister
--------------


5. (SBU)

Kuwait, March 8, 2006


Your Excellency:

I would like to ask your assistance in facilitating a
Government of Kuwait instruction to the Kuwait Petroleum
Corporation (KPC) regarding the continuation of concessionary
pricing for jet fuel provided to U.S. forces in Kuwait for
use in Operation Iraqi Freedom (OIF).

In April 2005, the Government of Kuwait agreed to provide up
to 880,000 gallons of fuel per day to U.S. forces in Kuwait
for use in OIF, at a price of $0.57 per gallon. This is a
very generous contribution and is but one of many ways that
Kuwait has supported U.S. and Coalition efforts in Iraq.

The specific fuel contract between KPC and the U.S. military
ended on January 31 and has not yet been renewed. KPC has
not yet received instructions from the Government of Kuwait
to renew the concessionary price contract, and has advised us
that the company is waiting for specific instructions. The
United States Government kindly requests the Government of
Kuwait to approve the renewal of the jet fuel contract at the
previously agreed upon price of $0.57/gallon for a period of
one year.

As U.S. Vice President Dick Cheney noted during his January
17 call on then Prime Minister and now His Highness Amir
Shaykh Sabah Al-Ahmed Al-Jaber Al-Sabah, the United States
remains firmly committed to our efforts in Iraq. His
Highness the Amir urged the United States to maintain its
efforts in Iraq to achieve security and stability, saying
that Kuwait would continue to work tirelessly in support of
U.S. efforts to bring peace and stability to Iraq. We
continue to count on Kuwait to help the United States
alleviate the cost of this effort.

I look forward to discussing this issue with you further at
your earliest convenience. Please be assured of my highest
consideration.

Sincerely,

Richard LeBaron
Ambassador
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LEBARON