Identifier
Created
Classification
Origin
08DOHA83
2008-02-04 05:30:00
CONFIDENTIAL
Embassy Doha
Cable title:  

READOUT OF SECRETARY BODMAN'S JANUARY 22 MEETINGS

Tags:  ENRG EPET PREL EINV TRGY QA 
pdf how-to read a cable
VZCZCXRO8368
PP RUEHDE RUEHDIR
DE RUEHDO #0083/01 0350530
ZNY CCCCC ZZH
P 040530Z FEB 08
FM AMEMBASSY DOHA
TO RHMFISS/DEPT OF ENERGY WASHINGTON DC PRIORITY
RUEHC/SECSTATE WASHDC PRIORITY 7533
INFO RUCPDOC/DEPT OF COMMERCE WASHINGTON DC PRIORITY
RUEHHH/OPEC COLLECTIVE
RUEHZM/GULF COOPERATION COUNCIL COLLECTIVE
C O N F I D E N T I A L SECTION 01 OF 04 DOHA 000083 

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E.O. 12958: DECL: 02/03/2018
TAGS: ENRG EPET PREL EINV TRGY QA
SUBJECT: READOUT OF SECRETARY BODMAN'S JANUARY 22 MEETINGS
IN QATAR

REF: DOHA 75

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

C O N F I D E N T I A L SECTION 01 OF 04 DOHA 000083

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E.O. 12958: DECL: 02/03/2018
TAGS: ENRG EPET PREL EINV TRGY QA
SUBJECT: READOUT OF SECRETARY BODMAN'S JANUARY 22 MEETINGS
IN QATAR

REF: DOHA 75

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


1. (C) SUMMARY: U.S. Energy Secretary Samuel Bodman visited
Qatar January 22 for meetings with Minister of Energy and
Industry Abdullah Al-Attiyah, the Amir Hamad bin Khalifa Al
Thani, and representatives of major U.S. energy companies in
Qatar. Discussions focused on the U.S. perception that the
international oil market is currently under-supplied;
critical energy infrastructure security; the need to pursue
alternate sources of energy, including nuclear power; and the
extremely positive U.S.-Qatar energy relationship. END
SUMMARY.

-------------- --------------
Amir Pleased with U.S. Role in Qatar's Energy Sector
-------------- --------------


2. (C) The Amir told Secretary Bodman that Qatar deeply
appreciates the participation of U.S. companies in the energy
and education sectors. When he came to power in 1995, Qatar
was exporting 320,000 barrels/day of oil (b/d),but thanks to
American companies (plus Maersk),Qatar is now approaching
one million b/d. Secretary Bodman noted that U.S. energy
companies are very happy in Qatar, but they do have a problem
hiring and retaining enough qualified people. The Amir said
housing shortages in Qatar contribute to the problem, and it
would take a "long, long time" to find enough qualified
Qataris for the positions, particularly because many Qataris
prefer to start their own businesses and stay away from
government employment. Secretary Bodman said the U.S.
companies are not worried about corruption in Qatar. The
Amir said that "at the top" there is no corruption, and the
challenge is to "catch the small people." He said Qatar is
fighting corruption and singled out Al-Attiyah for his work
fighting corruption in the energy sector. Secretary Bodman
said that compared to a country like Russia, Qatar is an easy
place for U.S. companies to do business.


3. (C) Responding to a question by the Amir on the problem

of energy around the world, Secretary Bodman explained that
we will see continued efforts to diversify away from oil,
including the development of bio-fuels, solar power, and
nuclear power. Secretary Bodman described the Global Nuclear
Energy Partnership (GNEP) to encourage development of nuclear
power for positive purposes and in ways that are not
conducive to proliferation. The Amir responded that Qatar
"will be a little lazy for a while" in developing alternative
sources of energy because it has so much natural gas, but
added that because Qatar has sun all year and wind at the
northern tip of the peninsula, the potential exists for
alternative energy. Al-Attiyah added that Qatar Petroleum
has a new committee to study renewable energy. The Amir
stressed that any such efforts should be done in cooperation
with Education City, and Secretary Bodman added that Qatar's
students from the Texas A&M branch campus will be interested
in doing work on renewable energy. He said current prices
for energy are stimulating work in the private sector, such
as venture capital firms, and billions are currently being
invested in energy ideas with as many as 30-40 new projects
per quarter.


4. (C) Asked by the Amir if nuclear power is cheaper than
natural gas, Bodman explained that this was obviously not the
case for a gas producer like Qatar, but certainly it is for
the United States, particularly because between now and 2030,
energy demand in the United States will increase by 50
percent. Solar, wind, and bio-fuels currently cost more than
conventional oil and gas sources, but DOE is encouraging
research and development in areas that could result in
greater cost-competitiveness. Secretary Bodman also
described the President's efforts to push for the development
of new nuclear power plants and said that although a new
plant won't be built for perhaps ten years, the licensing
process will be completed for one before the end of the
current administration.

--------------
"A Great Partnership on Gas"
--------------


5. (C) During a separate expanded meeting with staff at the
Ministry of Energy, Al-Attiyah expressed pleasure that Qatar
would soon be "the number one supplier of liquefied natural
gas (LNG) to the U.S. market." He boasted that Qatar is the
leading Gulf country in terms of openness to foreign
investment in the energy sector and joked that he sees the

DOHA 00000083 002 OF 004


International Oil Companies' (IOC) participation in the
development of Qatar's energy resources as "a long-term
partnership, like a Catholic marriage that never ends in
divorce." Noting that the U.S. would soon be one of Qatar's
biggest customers for gas, Al-Attiyah expressed confidence in
the successful completion of the Golden Pass LNG receiving
terminal being constructed on the Texas-Louisiana border.
(Note: Golden Pass is scheduled to be operational in mid-2009
and will be 70 percent owned by Qatar Petroleum, with a 17
percent ExxonMobil equity and a 13 percent ConocoPhillips
equity. When completed, the terminal will receive 16 million
tons of gas per year and have a surge capacity of about a
million tons to allow for spot sales that could provide extra
supplies when needed.) Qatar Petroleum (QP) Director of Oil
and Gas Ventures, Saad Al-Kaabi, however, expressed concern
that current dredging efforts by the U.S. Army Corps of
Engineers around the Golden Pass terminal may not be
sufficient to accommodate Qatar's new fleet of mega-tankers.
Remarking that he had heard budget constraints might be
limiting the Corps' work, he encouraged Secretary Bodman not
to ignore this "seemingly small issue of strategic
importance."

-------------- ---
Egypt playing a "dangerous game" with Suez tolls
-------------- ---


6. (C) Al-Attiyah and his advisors expressed concern over a
10.5 percent increase in Suez canal tolls for ships carrying
LNG from Qatar to markets in Europe and North America.
Al-Attiyah noted that the Egyptians appear to be thinking
(incorrectly) that the high price of oil also extends to the
natural gas market and they can therefore increase their take
on such shipments. He said that further such increases would
cause Qatar to look more toward increasing sales to Asian
customers in order to protect their profits. Al-Attiyah
pointed out that Qatar currently sends 7.5 million tons of
gas per year to India, which has need of another 10 million,
and is under pressure from China to increase exports to that
country. QatarGas CEO Faisal Al-Suwaidi added that QatarGas
is currently studying the economic feasibility of supplying
North America by routing shipments around Africa, thereby
entirely avoiding the Suez Canal.

--------------
Press Conference Highlights Alternate
Sources of Energy, U.S.-Qatar Partnership
--------------


7. (U) During a joint press conference following their
expanded meeting, Sec. Bodman highlighted the increasing
global interest in energy security and the importance in
developing alternative sources of energy. He noted that as
fossil fuels become more expensive, it will be important for
the Gulf region to develop the infrastructure, institutions,
and technology required to use nuclear power. Sec. Bodman
also expressed appreciation to Qatar for its investments in
the United States, particularly the Golden Pass LNG terminal.
Asked by the press about oil supply, Sec. Bodman noted that
"the ultimate decision is OPEC's," but that "a case can be
made that there is a shortage of oil in the market."
Al-Attiyah responded with the same line he has used
frequently to the press, that according to Qatar's customers
there is no shortage, and speculators are to blame for the
recent run-up in price. He also noted that oil had retreated
from $100 a barrel to around $89 at the time of the press
conference. Al-Attiyah also said there is a possibility for
further Qatari investments in the United States, including
refineries.

-------------- --------------
U.S. Businesses Pleased by Partnerships with Qatar
-------------- --------------


8. (C) The heads of the five major U.S. energy companies
operating in Qatar (ExxonMobil, ConocoPhillips, Occidental,
Anadarko, and Chevron) told Secretary Bodman during a private
meeting that their relations are good with Qatar Petroleum
and the GOQ. They said their work is far easier in Qatar
than in most other foreign locations where IOCs operate
today. The businessmen noted that there is a general lack of
understanding of Qatar in Washington, particularly in terms
of its critical ability to expand natural gas supplies.
ExxonMobil and ConocoPhillips are already benefiting greatly
from the exploitation of Qatar's gas reserves (e.g., 20
percent of ExxonMobil's global revenue will soon come from
Qatar),and the other companies are positioning for the years
after 2012, when Qatar expects to lift its current moratorium
on new gas projects in the North Field. The businessmen

DOHA 00000083 003 OF 004


urged more senior Administration visits to Qatar since
high-level political engagement helps their business
prospects.


9. (C) The businessmen agreed that while they find
occasional corrupt practices, Qatar is the least corrupt of
countries in their experience; the Scottish head of
ExxonMobil comparing the Qatari level of corruption to that
found in the United Kingdom. The representatives credited
Al-Attiyah with taking a hard line against corruption and
said that corruption, when discovered, is dealt with
severely. There remains an obvious issue of family nepotism,
in the view of these energy representatives, who pointed out
that members of the ruling Al Thani family and other
prominent tribes hold key positions in the energy industry
based on familial ties more than merit.

-------------- --------------
Concern Over CFIUS, Increased Qatari Share of Projects
-------------- --------------


10. (C) The Committee on Foreign Investment in the U.S.
(CFIUS) continues to cause angst among the businessmen's
Qatari interlocutors. One noted that Qataris are "deeply
offended" by the security checks required to invest in the
United States. Since Qatari gas can go many other places,
the process must be managed carefully so that the United
States does not lose Qatar as a supplier. Even though, the
representatives maintained, Qatar Petroleum (QP) has more
experience in the oil and gas business and has more money to
invest in projects, the organization is still run by a few
key individuals. The businessmen noted a trend whereby Qatar
is increasing its shares of projects, and the IOCs are
assuming a role more as service provider than equity partner.

-------------- --------------
"Qatarization" a Concern, but an Unachievable Goal
-------------- --------------


11. (C) The U.S. company representatives expressed their
concern over the GOQ's "Qatarization" process, which has
mandated that over the next few years foreign companies must
have at least 50 percent Qatari employees throughout the
organization. Noting that such participation is
statistically impossible in a country where only 20 percent
of the 1 million residents are Qatari, and fewer than that
are of employable age or properly skilled, the head of
ExxonMobil said senior Qatari officials are beginning to
admit it's an untenable scheme. The Anadarko chief noted
that Al-Attiyah recently told foreign energy executives that
if their Qatari employees were not qualified, they should be
fired. The chase for talent in Qatar is further hobbled
because of restrictive immigration policies toward certain
countries, particularly India and Pakistan. (Note: Once a
foreign resident population approaches that of the native
Qatari population, as has happened with Indians, the GOQ
begins to restrict further immigration from that country.)

--------------
Energy Infrastructure Protection
--------------


12. (C) The heads of the U.S. energy companies told
Secretary Bodman they are generally comfortable with the

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level of security in Qatar, though greater security at Ras
Laffan would be welcome. Separately, oil platforms in the
Gulf, they noted, are vulnerable to frequent approaches by
fishing boats, since there is no way to keep them away. (See
reftel for separate discussions of critical energy
infrastructure issues.)


13. (SBU) Participants in the delegation's meetings included:

QATAR

Minister Al-Attiyah, Deputy Prime Minister and Minister for
Energy and Industry
Mohammed Saleh Al-Sada, Minister of State for Energy and
Industry Affairs
Hamad Rashid Al-Mohhanadi, RasGas Managing Director
Faisal Al-Suwaidi, CEO of QatarGas
Sa'ad Sherida Al-Kaabi, Qatar Petroleum Director of Oil and
Gas Ventures
Abdelaziz Al-Malki, Office Director for the Minister
Abdulla Hussain Salatt, Senior Adviser to the Minister

U.S.

Secretary Bodman

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Charge d'Affaires Michael Ratney
Kevin Kolevar, Assistant Secretary for Electricity Delivery
and Energy Reliability
Jeff Kupfer, Chief of Staff to the Secretary
Molly Williamson, Senior Foreign Policy Adviser
Benjamin Getto, Deputy Chief of Staff
George Person, Director for African and Middle East Affairs
Andrew Beck, Director for Public Affairs
James Hart, International Relations Specialist
David Fabrycky, Embassy Economic Officer


14. (U) Secretary Bodman's delegation cleared this message.
RATNEY