KUWAIT CABINET RENEWS CONTRACT FOR OIF FUEL AT

C O N F I D E N T I A L KUWAIT 001007 SIPDIS NOFORN SIPDIS STATE FOR NEA/ARP E.O. 12958: DECL: 06/26/2022 TAGS: EPET PREL ECON MOPS KU IZ SUBJECT: KUWAIT CABINET RENEWS CONTRACT FOR OIF FUEL AT DISCOUNTED PRICE REF: 06 KUWAIT 970 Classified By: Ambassador Richard LeBaron for reasons 1.4 (b) and (d). ¶1. (C/NF) Foreign Minister Shaykh Dr. Mohammed Al-Sabah informed the Ambassador on June 26 that the Kuwaiti Cabinet had agreed on June 24 to renew for one year an existing agreement with the USG to provide concessionally-priced fuel for Operation Iraqi Freedom (OIF). ¶2. (C/NF) This agreement, whose terms we re-state for the record, provides for one million gallons per day of fuel for OIF at a discounted price of 39 USD per barrel (93 cents/gallon). This equates to the 36 USD crude oil reference price used in GOK budget projections plus a 3 USD refinery fee. (Note: the current market price of Kuwaiti Export Crude is about 63 USD per barrel.) Presumably, the one-year renewal means through March 31, 2008, the end of Kuwait's fiscal year. The previous agreement was set to expire on March 31, 2007, but Kuwait Petroleum Corporation has continued to provide fuel at the discounted price pending renewal of the agreement. ********************************************* * For more reporting from Embassy Kuwait, visit: http://www.state.sgov.gov/p/nea/kuwait/?cable s Visit Kuwait's Classified Website: http://www.state.sgov.gov/p/nea/kuwait/ ********************************************* * LeBaron