Identifier
Created
Classification
Origin
08BASRAH84
2008-10-30 07:01:00
CONFIDENTIAL
REO Basrah
Cable title:
SHELL PREPARES WAY FOR GAS DEAL
how-toVZCZCXRO8756 PP RUEHDE RUEHIHL RUEHKUK DE RUEHBC #0084 3040701 ZNY CCCCC ZZH P 300701Z OCT 08 FM REO BASRAH TO RUEHGB/AMEMBASSY BAGHDAD PRIORITY 0390 INFO RUEHC/SECSTATE WASHDC PRIORITY 0807 RUCNRAQ/IRAQ COLLECTIVE RUEHBC/REO BASRAH 0844
C O N F I D E N T I A L BASRAH 000084
SIPDIS
E.O. 12958: DECL: 10/30/2018
TAGS: ECON EINV ENRG EPET IZ
SUBJECT: SHELL PREPARES WAY FOR GAS DEAL
REF: BAGHDAD 3101
CLASSIFIED BY: Won Lee, Acting Director, REO Basrah, State.
REASON: 1.4 (b)
(SBU) Summary: With a preliminary agreement in place, Shell
officials continue to visit Basrah and meet with Iraqi officials
as they finalize details of a long-term contract expected to be
signed in approximately twelve months. They plan to obtain
mutual commitment for the long run by signing a 25-year contract
with rights to renew for another 25 years. They have initiated
a series of projects now so that they will be ready to roll on
the day that the Joint Venture (JV) is in place. End Summary.
(SBU) Multiple Stakeholders: Shell expects to bring substantial
benefits to Iraq: Three and a half thousand South Gas Company
(SGC) staff and SGC equipment will be jointly managed by SGC and
Shell in an as yet unnamed JV entity. For their part, with a 49
per cent interest in the JV, Shell expects to evaluate the
equipment and infrastructure that SGC brings to the deal and
contribute a matching amount of financial investment. Shell
considers this a group endeavor which goes beyond the JV. The
coalition presence here provides a secure platform on which they
can build. Shell stakeholders, like GE and Mitsubishi, will
most likely come aboard to submit valuable additions to growing
Southern Iraq industrial activity. Shell welcomes the interest
of Dubai World and Dubai Ports authority in Basrah as these
investments add impetus to Basra development. Shell researchers
in London and the Hague are looking at which oil fields to start
on.
(SBU) Good Citizen Shell: Shell hopes to establish some quick
wins that will earn the good will of GoI, SGC and the provincial
and local folks that will be necessary to a successful JV.
Shell Regional Security Manager for the Middle East and North
Africa Mark Courtnell says Shell executives have not yet
determined exactly what form this will take and to which Iraqi
beneficiaries Shell will contribute. Education is a strong
possibility. The University of Basrah is under consideration.
Shell provides online training to its local staff and Shell SOP
is to exchange or TDY staff to other oil facilities or offices
for work and training. The Basrah USAID representative made a
concise but effective pitch for JV support of USAID projects in
Southern Iraq focusing on self-sustainable projects. She
requested an opportunity to do a presentation for Shell
officials. Shell currently has a team of four or five people
working full time on potential Iraqi projects who could review
the USAID projects.
(SBU) Power Plus: SGC will continue to submit an annual budget,
according to Shell. Courtnell did not speculate how much
revenue the JV would earn from recapture of the 7-800 million
cubic feet gas burn-off per day, but said it would generate all
of its own power needs and possibly contribute power back to the
grid, although Shell does not want to commit to generating power
for the grid until they have completed more studies. SGC now
consumes electric power from the Iraqi grid. Courtnell
stressed again that this deal is outside the Hydrocarbons Law.
(SBU) Laying a Foundation: Shell is sending out about ten
people a day, Iraqis trained by Mott MacDonald, to provide
on-the-ground information and analyses in Basrah. Shell
believes the coalition presence here provides a secure platform
on which the JV can build. Courtnell says Shell and Olive
Group, Shell's on-the-ground security contractor in Basra, are
meeting this week with SGC security to determine the extent of
Oil Police (OP) authority and effectiveness. As a part of Iraqi
Police, the OP are under the MoI. Shell Olive Group expect to
map the security relationships and environment before making any
security decisions for the longer term. Shell will assure a
strict human rights regime informs any security arrangements
made with IP, OP and the MoI.
(Confidential) Comment. Shell did not give much credence to a
threat from self-proclaimed "Southern Battalions" recently
published in local media. Courtnell and the Olive Group
Assistant Intelligence Manager Katie Smith said their
intelligence indicates the threat was an attempt from someone in
the Governor's office to manipulate the negotiations. Shell is
interested more in longer-term security and will have twelve
months or so in which to probe that security at the ground
level. End comment.
LEE
SIPDIS
E.O. 12958: DECL: 10/30/2018
TAGS: ECON EINV ENRG EPET IZ
SUBJECT: SHELL PREPARES WAY FOR GAS DEAL
REF: BAGHDAD 3101
CLASSIFIED BY: Won Lee, Acting Director, REO Basrah, State.
REASON: 1.4 (b)
(SBU) Summary: With a preliminary agreement in place, Shell
officials continue to visit Basrah and meet with Iraqi officials
as they finalize details of a long-term contract expected to be
signed in approximately twelve months. They plan to obtain
mutual commitment for the long run by signing a 25-year contract
with rights to renew for another 25 years. They have initiated
a series of projects now so that they will be ready to roll on
the day that the Joint Venture (JV) is in place. End Summary.
(SBU) Multiple Stakeholders: Shell expects to bring substantial
benefits to Iraq: Three and a half thousand South Gas Company
(SGC) staff and SGC equipment will be jointly managed by SGC and
Shell in an as yet unnamed JV entity. For their part, with a 49
per cent interest in the JV, Shell expects to evaluate the
equipment and infrastructure that SGC brings to the deal and
contribute a matching amount of financial investment. Shell
considers this a group endeavor which goes beyond the JV. The
coalition presence here provides a secure platform on which they
can build. Shell stakeholders, like GE and Mitsubishi, will
most likely come aboard to submit valuable additions to growing
Southern Iraq industrial activity. Shell welcomes the interest
of Dubai World and Dubai Ports authority in Basrah as these
investments add impetus to Basra development. Shell researchers
in London and the Hague are looking at which oil fields to start
on.
(SBU) Good Citizen Shell: Shell hopes to establish some quick
wins that will earn the good will of GoI, SGC and the provincial
and local folks that will be necessary to a successful JV.
Shell Regional Security Manager for the Middle East and North
Africa Mark Courtnell says Shell executives have not yet
determined exactly what form this will take and to which Iraqi
beneficiaries Shell will contribute. Education is a strong
possibility. The University of Basrah is under consideration.
Shell provides online training to its local staff and Shell SOP
is to exchange or TDY staff to other oil facilities or offices
for work and training. The Basrah USAID representative made a
concise but effective pitch for JV support of USAID projects in
Southern Iraq focusing on self-sustainable projects. She
requested an opportunity to do a presentation for Shell
officials. Shell currently has a team of four or five people
working full time on potential Iraqi projects who could review
the USAID projects.
(SBU) Power Plus: SGC will continue to submit an annual budget,
according to Shell. Courtnell did not speculate how much
revenue the JV would earn from recapture of the 7-800 million
cubic feet gas burn-off per day, but said it would generate all
of its own power needs and possibly contribute power back to the
grid, although Shell does not want to commit to generating power
for the grid until they have completed more studies. SGC now
consumes electric power from the Iraqi grid. Courtnell
stressed again that this deal is outside the Hydrocarbons Law.
(SBU) Laying a Foundation: Shell is sending out about ten
people a day, Iraqis trained by Mott MacDonald, to provide
on-the-ground information and analyses in Basrah. Shell
believes the coalition presence here provides a secure platform
on which the JV can build. Courtnell says Shell and Olive
Group, Shell's on-the-ground security contractor in Basra, are
meeting this week with SGC security to determine the extent of
Oil Police (OP) authority and effectiveness. As a part of Iraqi
Police, the OP are under the MoI. Shell Olive Group expect to
map the security relationships and environment before making any
security decisions for the longer term. Shell will assure a
strict human rights regime informs any security arrangements
made with IP, OP and the MoI.
(Confidential) Comment. Shell did not give much credence to a
threat from self-proclaimed "Southern Battalions" recently
published in local media. Courtnell and the Olive Group
Assistant Intelligence Manager Katie Smith said their
intelligence indicates the threat was an attempt from someone in
the Governor's office to manipulate the negotiations. Shell is
interested more in longer-term security and will have twelve
months or so in which to probe that security at the ground
level. End comment.
LEE