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