DJIBOUTI OFFICIALS SEEK U.S., NOT CHINA, FOR

C O N F I D E N T I A L DJIBOUTI 000708 SIPDIS SIPDIS STATE FOR AF/E AND OES ADDIS ABABA FOR REO LBRODEY LONDON, PARIS FOR AFRICA WATCHER NAIROBI FOR FCS E.O. 12958: DECL: 06/20/2017 TAGS: ECON ENRG EMIN EINV DJ SUBJECT: DJIBOUTI OFFICIALS SEEK U.S., NOT CHINA, FOR FUTURE ENERGY/MINE PROJECTS Classified By: Pol/Econ Officer Christopher B. Patch for reasons 1.4 (b ) and (d) ¶1. (C) SUMMARY. Djibouti's Minister of Energy told Emboffs he welcomed U.S. assistance and put a high priority on partnership with the United States, rather than China or other potential partners, in the area of energy and mine development. Djibouti's geothermal energy development looks promising, but additional sources of energy are required to meet Djibouti's growing demand. END SUMMARY. ¶2. (C) In a June 18 meeting with Emboffs, Djibouti's Minister of Energy said Djibouti's demand for electricity had already outpaced supply. The country needs to radically increase production, he said. There is great private-sector interest, but the Government of Djibouti (GODJ) lacks the know-how to coordinate and plan for energy sector growth. The GODJ seeks to re-write the energy policy and laws, to privatize its supply, and to plan effectively to meet future demand. ¶3. (C) In a separate meeting, the National Coordinator on Energy and Mines for Djibouti, Abdi Farah, told Econoff about the recent visit of a geothermal team from Iceland. This visit was in conjunction with a MOU on developing geothermal energy that Djibouti signed earlier this year with Reykjavik Energy of Iceland, a state-owned but autonomous entity. Farah indicated that the Icelandic delegation came to Djibouti to pave the way for future activities near Lake Assal, beginning with a preparatory phase in September 2007, followed by a geophysics surface analysis in October and November 2007. If results are positive, they will drill three deep wells of approximately 2500 meters in February and March 2008. They expect that by 2009, the wells will determine whether the Icelanders will proceed with building a geothermal power plant. According to Farah, geothermal energy production could start as soon as 2012. ¶4. (C) The production from Lake Assal cite alone, only 40 to 100 megawatts, would be insufficient to meet Djibouti's growing energy demand, said Farah. Other partners then would become crucial, and, according to Farah, the United States would be a "quality partner" for Djibouti. He believes that the United States has the best expertise in exploiting surface reservoirs. Both surface and deep reservoirs exist near Lake Assal, but Iceland is only interested in deep reservoirs which normally produce high heat but also contain high salinity. Farah indicated that studies done by the French Geological and Mining Research Office confirm the potential for geothermal exploration in other sites around Djibouti, such as Gagadeh, Lake Abbe, Obock, and Arta. ¶5. (C) Farah indicated that Djibouti also has large reserves of industrial minerals such as perlite, diatomite, and gold. According to Farah, Djibouti's perlite deposits are of good quality, easily accessible, and can be used in thermal isolation, oil refining, horticulture, and as an absorbent for oil spills. Also, Djibouti has potential for gold exploitation. In some places, there are 11g/ton of gold, which could be very attractive for some gold companies. Farah indicated that feasibility studies are needed for such gold exploitation, and said the United States Geological Survey would be the "ideal partner". Farah expressed deep interest in cooperating with the United States, rather than China, in the area of energy and mines exploration, especially with the U.S. Department of Energy, the U.S. Geological Survey, and U.S. private sector firms. Djibouti seeks technical and financial assistance to map its resources. It welcomes experts from the United States who might train and assist the Ministry of Energy staff draft maps and form its energy policy and laws. ¶6. (C) COMMENT. The Minister of Energy made a strong personal pitch for the United States Government to help reorganize and revitalize Djibouti's energy sector. He and other officials made clear to us that they would prefer to work with U.S. firms to develop Djibouti's energy and mining sectors, citing both U.S. expertise and business practices. If the U.S. does not re-enter this market, however, Djibouti is likely to turn to China and others, including Middle Eastern investors, for development assistance. END COMMENT. SYMINGTON