OMANIS PUBLICLY CONFIRM OMAN-IRAN GAS DEAL

C O N F I D E N T I A L MUSCAT 000662

SIPDIS

E.O. 12958: DECL: 09/15/2018
TAGS: PREL EINV ENRG EPET IR MU
SUBJECT: OMANIS PUBLICLY CONFIRM OMAN-IRAN GAS DEAL
NEGOTIATIONS

REF: A. CARLSON-MACDONALD E-MAIL OF 9/15/08

B. MUSCAT 633

C. MUSCAT 313

D. MUSCAT 303

E. 07 MUSCAT 1036

Classified By: Ambassador Gary A. Grappo for Reasons 1.4 (b, d)


1. (U) A number of internet news and business sites have
recently published a Reuters report dated September 11 on an
Oman-Iran plan to develop Iran's off-shore Kish gas field in
the Arabian Gulf. Quoting a "project official" at Oman's
Ministry of Oil & Gas who "declined to be named," the Reuters
article stated that Oman would wholly fund development of the
Kish gas field and the construction of a 200-kilometer
pipeline to the Omani industrial port of Sohar at a cost of
up to USD 12 billion. The unnamed Omani official said he
expected an agreement to be signed by the end of 2008,
allowing for the production of gas by 2012. The source
further claimed that Oman and Iran were discussing the joint
development of the Hengam-Bukha gas field near the Strait of
Hormuz with the goal of supplying gas to Oman by 2011.
(Note: An electronic copy of the Reuters report has been
e-mailed to NEA/ARP (ref A). End Note.) Citing Iran's ISNA
new agency, the article said that some of the gas piped to
Oman in these deals would be processed at Omani liquefied
national gas (LNG) facilities and then sold on the
international market by the National Iranian Oil Company.


2. (C) Comment: The Reuters article tracks in part with
recent information on Oman-Iran gas negotiations shared with
the Ambassador by Omani Minister of Commerce & Industry
Maqbool bin Ali Sultan (ref B). While Maqbool confirmed that
Oman is willing to provide most of the capital for
development of the Kish gas field, and that Omani LNG
facilities could be used for re-export of Iranian gas, his
estimate of the minimum Omani investment in the project was
between four and five billion dollars, versus the seven-12
USD billion cited by Reuters. The most surprising part of
the Reuters story was the source - an undisclosed Omani
official - given that the Omani press has been conspicuously
silent on negotiations towards an Oman-Iran gas agreement
even as the Iranian media has long since declared publicly
that it is virtually a done deal. Post will continue to
remind relevant officials as appropriate of the potential
applicability of the Iran Sanctions Act (ref E),although
Oman's urgent need for new gas supplies and dearth of
potential suppliers severely limits receptivity to our
message. End Comment.
GRAPPO