UAE INPUT FOR NEW REQUIRED REPORTS TO CONGRESS ON

UNCLAS ABU DHABI 000197

SIPDIS

SIPDIS

DEPARTMENT FOR NEA/ARP AND EEB/ESC/IEC

E.O. 12958: N/A
TAGS: ENRG SENV APER ABUD AE
SUBJECT: UAE INPUT FOR NEW REQUIRED REPORTS TO CONGRESS ON
ENERGY

REF: SECSTATE 10743


1. Post appreciates the opportunity to provide input to the
Department's report to Congress as required by the Energy
Independence and Security Act of 2007. The UAE qualifies as a
major energy producer. Increasingly, with rapid economic
development, the UAE is becoming a larger energy consumer as
well. For example, the UAE currently imports natural gas
from Qatar via the Dolphin Project pipeline. Under the UAE's
constitution, natural resources belong to the individual
emirates, rather than the United Arab Emirates as a whole.
The emirate of Abu Dhabi has over 90 percent of the oil and
gas reserves in the UAE. For that reason, most energy
reporting has been done at the Embassy rather than at the
Consulate General. Consulate General staff have reported on
energy issues in Dubai and the northern emirates, especially
on issues related to possible purchases of Iranian natural
gas.


2. The economic section and the Foreign Commercial Service
both deal with energy matters. The economic section chief
devotes around fifteen percent of his time to energy issues,
although that percentage varies and is likely to increase
with the UAE's interest in exploring the development of
peaceful nuclear power. The economic section FSN devotes
around ten percent of his time. The Dubai poleconoff devotes
less than 5 percent of her time to energy matters. FCS
devotes about 30 percent of the time of one FSN and 15
percent of the time of the Commercial Counselor. In the
past, we devoted more economic section resources to energy
matters. However, over the past two years, we have lost two
full time economic officer positions at the Embassy. In
addition, Consulate General Dubai has lost one full time
Pol/Econ officer position as well as a planned FY 2008
Pol/Econ chief position. Post front office personnel
(Ambassador, Charge, CG) also play active roles.


3. Unfortunately, the loss in personnel coincides with
increasing USG and U.S. business interest in the UAE's
development of both oil and gas production capacity. The
loss also comes as the UAE begins to explore the development
of peaceful nuclear power and increases its overseas
energy-related investments. The Emirate of Abu Dhabi is
currently in the final stages of tendering a project to
develop onshore sour gas reserves. In addition, Abu Dhabi's
onshore oil concession expires in 2014, which should increase
advocacy opportunities for U.S. firms as Abu Dhabi decides
how it will re-bid these concessions.


4. The Economic section chief has been in Abu Dhabi covering
energy issues for four and a half years and is a graduate of
the FSI/EEB oil and gas course. During that time, Embassy
and Consulate General personnel have actively engaged the UAE
on issues such as the need for OPEC to increase oil
production and for Abu Dhabi to invest in increasing oil
production capacity, and to express our opposition to a
proposed Crescent Petroleum/Iranian natural gas deal. We
have also advocated successfully on behalf of U.S. firms
operating in the energy sector. For example, the Embassy
engaged in a multi-year effort to support ExxonMobil's
successful 2006 bid for a 28 percent stake in the giant Upper
Zakum offshore oil field. We have reported aggressively on
oil production decisions, the state of the UAE's critical
energy infrastructure, rapid growth in energy demand - and
the attendant search for energy supplies, whether imported
(Qatar or possibly Iran) or alternative (nuclear, renewable,
coal). Recently, the Embassy has worked closely with the UAE
as it explores developing peaceful nuclear power. We
actively brief U.S. businesses on the UAE's energy
environment and on issues related to investment. Finally, we
handle a steady stream of visitors interested both in energy
issues and in the disposition of Abu Dhabi's energy wealth
(i.e., sovereign wealth funds).


5. In FY 2007, the Embassy spent approximately USD 2,500 on
representational events that had a energy-related focus.
Post includes energy related contacts in almost all
representational events, so total spending is, in fact,
somewhat higher. State Department personnel costs for the
time devoted to energy issues -- not including Ambassador or
Charge -- in FY 2007 were roughly USD 23,500 for Abu Dhabi
and Dubai combined.
QUINN