DISCOURAGING OMANI GAS DEALS WITH IRAN

C O N F I D E N T I A L MUSCAT 000774

SIPDIS

DEPARTMENT FOR NEA/ARP, EEB/ESC/TFS

E.O. 12958: DECL: 11/12/2018
TAGS: PREL ENRG EPET ETTC IR MU
SUBJECT: DISCOURAGING OMANI GAS DEALS WITH IRAN

REF: A. STATE 110711

B. MUSCAT 662

C. MUSCAT 633

D. MUSCAT 303

E. 07 MUSCAT 1036

Classified By: DCM L. Victor Hurtado for Reasons 1.4 (b, d)


1. (C) The DCM delivered ref A demarche on November 5 to
Mohammed al-Hassan, Political Affairs Director for the
Minister Responsible for Foreign Affairs, Yusef bin Alawi.
In particular, the DCM emphasized that a major energy deal
with the regime in Tehran would undermine attempts by the P5
plus 1 to reach a diplomatic solution to Iran's nuclear
program. He further stressed Iran's unreliability as an
energy supplier and the possible application of the Iran
Sanctions Act (ISA) to an Oman-Iran gas deal.


2. (C) Al-Hassan replied that Iran had not been Oman's first
choice as an energy partner. The Sultanate had approached
several countries, including the UAE and Qatar, in an attempt
to meet Oman's pressing gas needs, but only Iran was both
willing and able to supply the needed quantities of gas.
Al-Hassan carefully noted that overall trade and commerce
between Iran and Oman was "very small" in comparison to that
of neighboring GCC states and that this was "not by chance,
but by design." "We don't want to get too involved with Iran
commercially," he commented. Al-Hassan further said that
Omani officials spoke very openly and frankly with the
Iranians and had delivered some "tough messages."


3. (C) While al-Hassan refrained from providing information
on the status or details of negotiations with Iran, he
asserted that much of the information in the international
media on the proposed gas deal was "inaccurate." The Omani
government, accordingly, chose not to respond to such
reports. He stated that unlike some other countries, such as
Switzerland and Turkey, that had or were very close to
finalizing energy agreements with Iran, "(Oman) has no deal
yet; when and if there is one, we will tell you." Al-Hassan
also remarked that an Oman-Iran deal on gas development was
not prohibited by any international agreement or UN
sanctions, which the Sultanate was keen to uphold.


4. (C) Comment: The Omani government remains aware of our
serious concerns over its gas negotiations with Iran. It
would likely be pleased to pursue a deal with a different gas
supplier, but sees itself with no credible option other than
Iran to provide the quantities of natural gas that it
desperately needs to fuel its development and economic
diversification plans. If we are to realistically expect
Oman to abandon its negotiations with Tehran, we should
strongly consider engaging with Oman's gas-endowed neighbors
to provide the Omanis with a better alternative to Iran. End
Comment.
GRAPPO