Identifier
Created
Classification
Origin
08DOHA889
2008-12-28 13:07:00
CONFIDENTIAL
Embassy Doha
Cable title:  

SOUTH KOREA TO RECEIVE MORE QATARI GAS, FOR A PRICE

Tags:  ENRG EPET PREL QA KS 
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VZCZCXRO5542
PP RUEHDE RUEHDIR
DE RUEHDO #0889/01 3631307
ZNY CCCCC ZZH
P 281307Z DEC 08
FM AMEMBASSY DOHA
TO RUEHC/SECSTATE WASHDC PRIORITY 8564
INFO RUEHZM/GULF COOPERATION COUNCIL COLLECTIVE
RUEHUL/AMEMBASSY SEOUL 0330
C O N F I D E N T I A L SECTION 01 OF 02 DOHA 000889 

SIPDIS

E.O. 12958: DECL: 12/28/2018
TAGS: ENRG EPET PREL QA KS
SUBJECT: SOUTH KOREA TO RECEIVE MORE QATARI GAS, FOR A PRICE

REF: DOHA 811

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

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

-- South Korea's Prime Minister received a "verbal promise"
from Qatar's energy leaders for additional liquefied natural
gas (LNG) supplies, provided Seoul is willing to pay a higher
price, according to two South Korean diplomats in Doha.

-- South Korea is following the discussion of a "cartel"
among gas exporters but seeks to separate political issues
from its commercial dealings with Qatar.

-- Qatar plans to buy 54 LNG tankers from Korean shipyards, a
major investment which will help double Qatar's export
capacity.

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

-- At least some of Qatar's gas contracts reportedly allow
Qatar to divert shipments when higher prices are available on
the spot market.

-- A string of high-level foreign leaders have visited Doha
in recent months to plead for additional gas supplies, with
most rebuffed as Qatar's current production is fully
committed. However, since South Korea is Qatar's largest
importer of gas, and there is an established commercial
relationship, Qatar may be willing to make an exception for
Seoul.

End Key Points and Comment.

--------------------
Promise for More Gas
--------------------

C O N F I D E N T I A L SECTION 01 OF 02 DOHA 000889

SIPDIS

E.O. 12958: DECL: 12/28/2018
TAGS: ENRG EPET PREL QA KS
SUBJECT: SOUTH KOREA TO RECEIVE MORE QATARI GAS, FOR A PRICE

REF: DOHA 811

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

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

-- South Korea's Prime Minister received a "verbal promise"
from Qatar's energy leaders for additional liquefied natural
gas (LNG) supplies, provided Seoul is willing to pay a higher
price, according to two South Korean diplomats in Doha.

-- South Korea is following the discussion of a "cartel"
among gas exporters but seeks to separate political issues
from its commercial dealings with Qatar.

-- Qatar plans to buy 54 LNG tankers from Korean shipyards, a
major investment which will help double Qatar's export
capacity.

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

-- At least some of Qatar's gas contracts reportedly allow
Qatar to divert shipments when higher prices are available on
the spot market.

-- A string of high-level foreign leaders have visited Doha
in recent months to plead for additional gas supplies, with
most rebuffed as Qatar's current production is fully
committed. However, since South Korea is Qatar's largest
importer of gas, and there is an established commercial
relationship, Qatar may be willing to make an exception for
Seoul.

End Key Points and Comment.

--------------
Promise for More Gas
--------------


1. (C) South Korean DCM and Counselor Sung-hwan Moon and
First Secretary responsible for Economic and Energy Issues
Dr. Heonsang Koo told Econoff Fabrycky December 21 that
Korean Prime Minister Han Seung-soo came to Doha for two days
with a delegation of 40-plus members for the Financing for
Development conference in late November. During the visit
the Prime Minister received a "verbal promise" from Energy
Minister Abdullah Al-Attiyah and the Amir's Economic Advisor,
Dr. Ibrahim Al-Ibrahim, that Korea could have an additional 2
million tons per annum (mta) if it was willing to pay a
higher price for the gas than is the case under current
contracts.


2. (C) South Korea is currently Qatar's largest gas customer,
at about 7 mta of regular shipments and usually about 1 mta
of spot shipments. (Note: This accounts for about one-quarter
of Qatar's current LNG exports). The gas is imported via
KOGAS, a state-run natural gas distribution company. Moon
noted that KOGAS deals on most issues directly with the GOQ
and so the embassy usually has only tertiary knowledge in the
energy relationship. However, he noted that Korea needs two
mta of additional gas and has two options - they find small
available amounts from various current suppliers (Australia,
Indonesia, and others) or they get it "all in one swoop" from
Qatar.

-------------- --------------
Korea Staying Away from Political Issue of Gas Cartel
-------------- --------------


3. (C) Asked how Korea views the recent public discussion of
a gas cartel and possible joint Qatari projects with Iran,
the two diplomats noted that they and South Korean leadership
are "following it." However, South Korea tends to stay away
from the political aspects of the energy sector and tries to
keep the focus on the commercial relationship. Moon mused
that he "feels sorry" for Qatar because in some ways the
country is like Korea - surrounded by bigger powers and
needing to find a way to have a relationship with each one.

--------------
Taner Order to Boost Qatar's Export Capacity
--------------


4. (C) Separately, Moon noted that Al-Attiyah visits Korea
every year as part of a swing through Qatar's Asian
customers. On his most recent visit, he checked the status
of Qatar's order for 54 LNG tankers from Korean

DOHA 00000889 002 OF 002


manufacturers, which started making deliveries this year.
(Note: Qatar's order represents almost half of the LNG
tankers either under construction or on order around the
world. Most of these mega-tankers will significantly
increase the size of Qatar's export capacity; e.g., the new
Q-Max has a 266,000 cubic meter capacity.)

Ratney