QATAR'S ENERGY MINISTER CONFIRMS POSSIBLE JOINT

C O N F I D E N T I A L SECTION 01 OF 03 DOHA 000811

SIPDIS

E.O. 12958: DECL: 11/18/2018
TAGS: ENRG EPET EINV ETTC PREL QA IR RU
SUBJECT: QATAR'S ENERGY MINISTER CONFIRMS POSSIBLE JOINT
VENTURE WITH IRAN AND RUSSIA TO DEVELOP SOUTH PARS GAS

REF: A. STATE 115979

B. L/EGAN-NEA/BLONG EMAIL 17 NOVEMBER 2008

C. DOHA 747 (EXDIS)

D. DOHA 798 (EXDIS)

DOHA 00000811 001.2 OF 003


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(C) KEY POINTS
--------------

-- Qatar's Energy Minister confirmed to Ambassador November
18 that Russia, Iran, and Qatar are actively discussing a
joint venture to develop Iran's large South Pars gas field,
which the Minister portrayed as purely commercial.

-- Ambassador warned that the joint venture could trigger the
Iran Sanctions Act (ISA). Ambassador briefly described the
provisions of the law. Al-Attiyah said his legal team was
already examining closely the potential consequences for
Qatar of involvement with Iran's energy sector.

-- Once that legal review was done, Qatar would weigh the
pros and cons and decide whether to proceed with the joint
venture on the basis of its own national interests. But he
reiterated that the joint venture was just an idea, a
proposal still far from adoption.

--------------
(C) COMMENT
--------------

-- At the beginning of the meeting, Al-Attiyah appeared to
think that any USG objections to the joint venture, as
expressed in U.S. law, would center on U.S. company
participation in the joint venture.

-- When Ambassador pointed out that provisions of the Iran
Sanctions Act could affect Qatari companies significantly
involved in a joint venture to develop Iran's gas fields (per
Ref B),the Minister appeared a bit surprised, but
immediately began hinting strongly that Qatar was in a good
position to respond commercially.

-- If sanctions were applied under the Act, Al-Attiyah
suggested, but in a surprisingly avuncular manner, that Qatar
could take the United States off the list of countries to
which Qatar supplied liquefied natural gas (LNG).

-- He appeared to believe Qatar had the upper hand with the
United States, at least commercially, especially when he
indicated Qatar was prepared to write off Qatar's investments
in the Golden Pass LNG terminal, if a deal with Iran proved
lucrative enough.

-- Qatar has no shortage of potential gas customers,
bolstering the Minister's confidence. Qatar routinely hosts
senior leaders from around the globe, many of whom attempt to
secure gas contracts with Qatar. The Indian and British
Prime Ministers were both recently in Doha and gas imports
were high on their agendas.

-- Given the substance of the exchange, it was ironic that
there was little tension in the meeting, with both the
Ambassador and the Minister expressing optimism that the
issue could be resolved in a way that left the bilateral
relationship still strong and intact. In fact, Al-Attiyah
ended the meeting with a repeated assurance that the joint
venture idea was still just that, an idea.

End Key Points and Comments.


1. (C) Drawing on Ref A, Ambassador met November 18 with
Minister of Energy and Industry and Qatar Petroleum (QP)
Chairman Abdullah Bin Hamad Al-Attiyah to express strong U.S.
concerns about development of a gas cartel and talks on a
possible Qatar-Iran-Russia joint venture on LNG. Also
attending the meeting were the Minister's senior technical
advisor and QP board member Abdulla Salatt and Econoff.


2. (C) Al-Attiyah began by stating that he wanted to give the
United States confidence that "we've never thought of this
(group) as a gas OPEC." He continued that Qatar is happy it
is involved in the discussions with Russia and Iran because
it allows them to better control any cooperation by others on
gas issues.


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3. (C) Implying that one or both of the other group members
wanted agreements on price, Al-Attiyah stated that "we
removed everything on price" from the discussions, and he had
told his counterparts that "no one can discuss price except
me and my (contract partners)". (Note: Al-Attiyah was also
quoted in local press November 18 as dismissing the idea of a
gas OPEC. In those comments, he noted that he could not cut
gas exports to Qatar's customers without financial penalty;
he would not do anything to threaten contractual agreements
in gas trade; and he favored producer-consumer discussions to
try and create stability in the gas market.)


4. (C) Ambassador acknowledged that a gas cartel was not a
primary subject of concern and asked the Minister to clarify
Qatar's intentions with the publicly announced potential for
a Russia-Iran-Qatar joint venture on gas.


5. (U) Note: Moscow's ITAR-TASS news agency reported November
12 that the three countries were discussing a joint venture
where gas produced in Iran's South Pars field -- the massive
field shared with Qatar -- would be transported by pipeline
to Qatar where it would be liquefied for further export.
However, a November 18 report from the same news agency
quoted Gazprom Deputy Chairman Alexander Medvedev as saying
of the joint venture: "A draft project is in an initial
stage, and work to study the draft has just begun. It is too
early to forecast when the joint venture might be
established." Medvedev also downplayed the potential for a
gas OPEC, saying "the partnership between Iran, Qatar and
Russia is, above all, aimed at the realization of concrete
projects." Further confusing the issue, on November 18
Tehran's IRNA news agency quoted Iran's Oil Minister
Gholamhossein Nozari as saying: "There is agreement on
setting up of a joint company which would be able to develop
work in the three countries or any other world spot. But to
have Iran's gas go to Qatar and be changed into LNG there, we
do not accept that by any means... The Islamic Republic
agrees to the two countries, Qatar and Russia, investing in
South Pars and the production of gas to be done on
partnership basis in Iran." End Note.


6. (C) Al-Attiyah asserted that "a joint venture is
different, purely commercial." Ambassador responded that any
involvement with Iran necessarily has political overtones,
and underscored the potential legal ramifications for any
significant Qatari investment in Iran's energy sector under
the Iran Sanctions Act. Al-Attiyah said "we know it very
well" and assured that any joint venture would not use
American companies or technology. After Ambassador explained
again that the Act covers not just U.S. companies but foreign
companies such as Qatar Petroleum, Al-Attiyah assured he
would have his legal experts review the appropriate
legislation in the context of any proposal. Salatt added
that Qatar would make sure it is not "paralyzed under
sanctions."


7. (C) As the conversation progressed, Al-Attiyah downplayed
the joint venture proposal, saying the three parties "just
have an idea" and are pursuing it in ongoing discussions. He
reiterated that there is no political angle for Qatar and
that Qatar is only looking at it from a commercial
perspective. Ambassador responded that the USG looks at any
deal with Iran as having political and security components,
and explained why.


8. (C) Al-Attiyah said "I'm in business, looking for
opportunities...I never mix business with politics."
Ambassador reiterated that as Qatar makes commercial
decisions, it needs to take into account their potential
political and commercial ramifications.


9. (C) Al-Attiyah noted that, in his view, any joint venture
with Iran could in the future use U.S. companies. He
referenced the U.S.-Iranian talks on Iraq security matters
and speculated that U.S. policy on Iran would change in the
near future. Ambassador attempted to disabuse the Minister
of the notion that U.S. law on Iran might change, certainly
any time soon, given the regime's regional policies, its
nuclear program, and its support for terrorism.


10. (C) Remaining cordial, Al-Attiyah said Qatar would do
what is in its commercial interests. At the end of the day,
if the U.S. pushes Qatar too hard, Qatar could make a
commercial decision to stop supplying LNG to the United
States. Al-Attiyah clarified that "I'm not (making a threat)

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but if America tries to push us we don't have to export."


11. (C) He then recalled how in the past the USG had cut off
the supply of spare parts to Gulf Helicopters (a QP
subsidiary) because it had a logistics contract with Shell
and Total for Iranian oil operations. He noted that the
company replaced its fleet with European helicopters and
asked: "who is the loser here?" In response to Ambassador's
comment that both sides lose, Al-Attiyah responded that "no,
we are ok." He then recalled a similar episode that occurred
over ties with Sudan. Salatt added that his personal opinion
was that USG law hurts U.S. interests much more than it hurts
those of Iran.


12. (C) Ambassador noted that we have a strong bilateral
relationship on energy and Qatar had quite a bit invested in
the Golden Pass LNG terminal in Texas. He pointed out that
his concern was to make sure Qatar examines all potential
angles of any deal, and that it weigh carefully the arguments
against such a joint venture. Moreover, Ambassador could not
believe Qatar was unconcerned by the prospect of U.S.
sanctions. Al-Attiyah responded with a wink that "1 billion
(dollars) is nothing in our business."


13. (C) Separately, Al-Attiyah noted that QP had recently
signed an LNG joint venture agreement with Chevron in
Venezuela and asked why that was different. Ambassador
responded that the specific sanctions in question apply to
Iran, so U.S. laws concerning such transactions with
Venezuela were not the same. Al-Attiyah concluded that "we
are not doing anything without carefully weighing the pros
and cons. I hate legals (sic) but we will examine (your
concerns) closely and have our legal department look at
possible consequences. The joint venture is just an idea,
anyway."

LeBaron