(C) GOQ SOLICITS MASSIVE CHARITABLE CONTRIBUTIONS

C O N F I D E N T I A L SECTION 01 OF 03 DOHA 000286

SIPDIS

SIPDIS

STATE FOR NEA/ARP, EEB/ESC/IEC/EPC (GRIFFIN)
DOE FOR GEORGE PERSON, JAMES HART, GINA ERICKSON

E.O. 12958: DECL: 04/09/2033
TAGS: ENRG EINV EPET QA
SUBJECT: (C) GOQ SOLICITS MASSIVE CHARITABLE CONTRIBUTIONS
FROM INTERNATIONAL OIL COMPANIES; MAY SIGNAL A TROUBLING
SHIFT IN QATAR'S ENERGY SECTOR

REF: 2007 DOHA 1069

Classified By: Charge d'Affaires Michael A. Ratney, reasons 1.4 (b) and
(d).


1. (C/NF) SUMMARY: In late March, the GOQ solicited over one
billion dollars in donations from international oil companies
(IOCs) operating in Qatar, and other companies doing business
with Qatar Petroleum, to support the construction of a new
medical center. The IOCs are shocked and angered by the
request, which represents a significant departure from their
normally positive and businesslike relationship with the GOQ.
None of the U.S. IOCs are considering donations, as the
requested amounts exceed their global budgets for such
charity work, and they are aware the perception of a quid pro
quo could be construed as violating the Foreign Corrupt
Practices Act. Post strongly believes that Washington should
note but not make any reaction to this issue. END SUMMARY.

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Out of the Blue, a "Request" for Donations
--------------


2. (C/NF) In an unprecedented move, the Ministry of Energy
and Industry sent letters in late March to each of the IOCs
operating in Qatar requesting massive donations for the new
Sidra Medical Center. (Note: Sidra Medical and Research
Center is being built through the initiative of the Qatar
Foundation (QF),a non-profit organization run by the Amir's
wife/consort Sheikha Mozah. QF is leading Qatar's rapid
development of its educational, medical, and social
infrastructure. Sited at Qatar's Education City complex and
scheduled to open in 2011, Sidra is intended to support
world-class clinical care, medical education, and biomedical
research. The Center reportedly will be funded by a USD 7.9
billion endowment from the Qatar Foundation. End Note.) The
letters were signed by Deputy Prime Minister and Minister of
Energy and Industry Abdullah Al-Attiyah and delivered in
person to each of the IOC country managers by the Minister of
State for Energy and Industry Dr. Mohammad Al-Sada, the
Ministry's number two official. The letters contained
specific donation amounts, apparently tied to the size of
each company's operations in Qatar, and gave the companies
three years to pay. Econoff and Commercial Counselor learned
that the Ministry asked the IOCs for the following:

-- ExxonMobil: USD 280 million
-- Maersk: USD 280 million
-- Shell: USD 150 million
-- ConocoPhillips: USD 80 million
-- Occidental: USD 80 million
-- Total: USD 80 million
-- Q-Chem (a Chevron-Phillips joint venture): USD 80 million


3. (C/NF) Smaller service and operating companies were asked
for lesser amounts, and Microsoft and GE also reportedly
received request letters. We estimate that the Energy
Ministry requested at least USD 1 billion in donations from
the companies and possibly as much as USD 1.7 billion.

-------------- --
IOCs Angered, Concerned About FCPA Implications
-------------- --


4. (C/NF) The IOCs are shocked and unsettled by the request,
and view the letters as a crude attempt at extortion. Most
believe Minister Al-Attiyah would have only grudgingly made
the request at the behest of Sheikha Mozah, one of the few
people in the country who outranks him. Econoff and
Commercial Counselor met with the heads of all five major
U.S. IOCs operating in Qatar to gauge their reaction; none
could conceive of ever donating even a fraction of the
request to Sidra or other social causes. In most cases, the
requests are larger than the entire amount spent worldwide by
their companies on corporate social responsibility (CSR)
programs. (Note: ExxonMobil spent about USD 11 million in
Qatar last year on CSR, while ConocoPhillips spent about USD
1 million and Occidental spent about USD 250,000.)


5. (C/NF) The IOC heads also pointed out that it would appear
absurd to their shareholders and other countries for them to
be seen giving money to Qatar, one of the world's wealthiest
states, when there are so many other truly deserving
countries for CSR projects in Africa and other places the
IOCs work. ConocoPhillips is particularly shocked by the
request, as they have not yet made a profit on any of their

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investments in Qatar. Moreover, the company recently
invested USD 25 million in projects at the Qatar Science and
Technology Park (also a QF initiative),in part as a gesture
of goodwill to Qatar as ConocoPhillips' commercial operations
get off the ground here.


6. (C/NF) Most of the U.S. IOCs are concerned about potential
implications under the Foreign Corrupt Practices Act (FCPA),
and immediately sent the letters to their legal departments
for review. The size of any potential contribution would
also be reportable to the Securities and Exchange Commission,
and invite public, shareholder, and press scrutiny. The IOCs
are worried that any sort of accommodation of the request, by
their company or any of the others, would lead to a slippery
slope where Qatar would make further requests in the future.
Moreover, any donation could have a damaging demonstration
effect for others in the region or worldwide, leading to
similar requests from other governments.


7. (C/NF) Most of the major IOC heads have been in discreet
contact on how to respond to the letter and are hoping that
none of their competitors break ranks by responding
positively to the request. The U.S. executives are worried
that Shell and/or Total will cave in, pointing to a
reputation for acceding to such requests in other places
around the world (NFI).

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Other Signs of a Changing Landscape
--------------


8. (C/NF) The head of ExxonMobil in Qatar (strictly protect),
told Emboffs April 8 that Minister Al-Attiyah is under
pressure within the GOQ to increase the independence of Qatar
Petroleum (QP) and cut its reliance on IOCs. There is an
increasing desire for QP to assume full responsibility for
all future gas projects, though even after 40 years of IOC
help, it is nowhere near ready to do so. This manager, who
has a good relationship with the Amir and other senior
leaders, believes the Amir must not fully understand the
implications of the letter's request. He assessed that
someone in the Qatar Foundation with no understanding of the
energy business successfully advocated for the Amir and his
wife's support of the request, without any explanation or
understanding of the drastic effects this would have on the
IOCs.


9. (C/NF) There are other recently emerging signs that the
GOQ is changing its long-standing approach of relying on
IOCs. The head of Occidental Petroleum in Qatar (strictly
protect) told Emboffs April 8 that QP is forming lots of new
affiliates and service companies with the intent of getting
the IOCs to use them as contractors, thereby keeping more of
the money from energy contracts back in Qatar. Normally,
such Qatari companies would get a preference in contract
bidding, but the IOCs are now also being strongly encouraged
to use the companies. This businessman termed the scheme a
"good national plan but bad for us because it will remove
competition over the long-term."


10. (C/NF) The head of Anadarko in Qatar (strictly protect)
told Econoff April 7 that Minister Al-Attiyah may be losing
his grip on specifics of the relationships with IOCs. He
charged that Sa'ad Sherida Al-Ka'abi, QP's Director of Oil
and Gas Ventures, is exerting a deleterious effect on
relations with companies by favoring tougher terms on
existing and future deals. As an example, he explained how
Anadarko had been an exploration partner with Wintershall in
exploring Block 11, an area off Qatar's northern coast.
Anadarko was initially unsuccessful in finding oil or gas but
asked for a one-year extension with no additional
requirements, and duly received a letter from the Minister
assuring them their work program could continue as requested.
Al-Ka'abi later intervened, however, and told Anadarko it
could only continue exploration if it gave up rights to a
significant part of the formation. Discouraged by this
development, Anadarko pulled out of further exploration in
the block. As a second example, Anadarko recently shot 3D
images of Block 4 at a cost of USD 12 million and identified
a structure which could yield significant quantities of
natural gas. Al-Ka'abi promptly put out a development bid
for the area and ordered Anadarko to give its survey data to
the other bidding competitors. Moreover, Al-Ka'abi forbade
Anadarko from charging for the data or otherwise finding a
mechanism to cost-recover its investment. The Anadarko
manager conceded that opening the block to bidding was not a

DOHA 00000286 003 OF 003


breach of contract, but complained that "never in my career
has a government tried to take our data like this."

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COMMENT: Take Note, but Let it Pass
--------------


11. (C/NF) As reported reftel, Qatar has for years been free
of overt signs of resource nationalism and in general a
welcoming place for foreign investment, particularly in the
energy sector. Minister Al-Attiyah genuinely seems to
recognize and value the essential contribution that IOCs have
made to Qatar's development over the last generation and
always speaks of long-term partnerships for the future. This
donation request may herald a changing of the guard and a
significant shift in the Qatari approach to exploiting its
energy resources. It likely also indicates that Sheikha
Mozah is beginning to exert influence outside of her
traditional lane of social/educational issues, though perhaps
without a full understanding of the implications of doing so.
(Note: In late March, QP signed an agreement with the
Science and Technology Park to open a USD 75 million research
center; it is possible this was also done under pressure from
the Qatar Foundation.)


12. (C/NF) At the same time, the massive request of the IOCs
is confusing given Qatar's enviable economic position. Qatar
will soon - literally - have more money than it knows what to
do with, and certainly the fate of the Sidra initiative does
not hinge on IOC monetary support. Perhaps the GOQ knows how
bad it would look to change the terms of existing contracts,
as has happened in Venezuela and elsewhere. Sheikha Mozah
and/or other GOQ elements may have believed the "request"
would be a more palatable method to keep more of Qatar's
energy wealth in-country. At this point, we are not sure
where this initiative originated, but it certainly looks like
the GOQ badly miscalculated, and did not fully assess how
unlikely it would be for most IOCs to meet such a request.


13. (C/NF) Post strongly believes that the USG should make
no/no comment or reaction to the request, or even acknowledge
knowing about the letters' existence. Our U.S. energy
contacts were candid with us, in confidence, and emphasized
that USG involvement would only cause them more trouble and
put them in a worse position with the GOQ. Post remains in
close contact with local U.S. energy company managers and
will continue to actively watch for signs of the GOQ changing
its approach to foreign investment and report developments
septel.

RATNEY