SCENESETTER FOR THE VISIT OF DOE DEPUTY SECRETARY PONEMAN

UNCLAS SECTION 01 OF 02 ABU DHABI 001117

SENSITIVE
SIPDIS

DEPARTMENT FOR S/CIEA, ISN/NESS, EEB/ESC, EEB/CBA AND NEA/ARP
DOE FOR PERSON
NSC FOR JOST

E.O. 12958: 11/22/2019
TAGS: ENRG EPET KNNP PGOV ECON ETRD AE
SUBJECT: SCENESETTER FOR THE VISIT OF DOE DEPUTY SECRETARY PONEMAN

REF: ABU DHABI 1101


1. (U) Mission UAE looks forward to hosting Deputy Secretary of
Energy Poneman's December 8-10 visit to Abu Dhabi. Reftel provided a
separate classified scenesetter.

THE UAE AND THE BILATERAL RELATIONSHIP
--------------


2. (SBU) In the past five years, the United Arab Emirates has
emerged as one of the economic powerhouses of the region and attained
a commensurate level of political influence. The UAE has troops in
Afghanistan, is an important political player in Pakistan, and its
support is sought by leaders throughout the Middle East, and further
afield. Although a tiny country, geographically and demographically,
the UAE punches well above its weight class in international circles.

A COUNTRY BUILT ON OIL AND GAS
--------------


3. (SBU) Most of the UAE's development, particularly in the Emirate
of Abu Dhabi, was funded by oil revenues. The hydrocarbon sector was
developed years before the UAE was established (1971) and provide its
population with a high standard of living. Today, Abu Dhabi -
through state-owned Abu Dhabi National Oil Company (ADNOC) produces
approximately 2.2 million barrels per day (mbpd) of oil although
production capacity exceeds 2.6 mbpd. ADNOC is investing in
increased production, largely through the application of advanced
recovery technologies. Abu Dhabi's main export destinations are
Japan and South Korea. ADNOC expects to offer new concessions in
2014 and 2018, potentially allowing U.S. companies to increase market
share here.


4. (SBU) Although the UAE exports about 4 billion standard cubic feet
a day (scfd),the UAE's gas deposits are largely associated and a
significant portion of production is reinjected for enhanced oil
recovery. The UAE has one large sour gas field, Shah, which is being
developed by ADNOC and ConocoPhillips and could yield over 500
million scfd. Other projects are underway to expand existing gas
production, however, much of this is expected to be used for
reinjection. Domestic production is insufficient to power the UAE's
rapid economic development. In 2001, the UAE (then as the UAE
Offsets Group and now as Mubadala) entered into a long term gas deal
with neighboring Qatar. Named Dolphin Energy, the project currently
imports 2 billion scfd by a pipeline designed to deliver 3.2 billion
scfd.


5. (SBU) In addition to its oil and gas production, Abu Dhabi-owned
companies have also made significant investments in global energy
assets. In addition to Dolphin, state-owned investment corporation
Mubadala purchased Singapore's Pearl Energy and owns assets across
the Middle East and North Africa. Government-owned International
Petroleum Investment Corporation (IPIC) has made both domestic and
international investments in refineries, pipelines, and other
production facilities. Abu Dhabi Energy Company ("Taqa") has
purchased power facilities as far afield as Jamaica, invested in
storage in Europe and owns domestic power assets.

...TURNS TO GREEN ENERGY
--------------


6. (SBU) In 2007, Abu Dhabi Emirate began a study of the UAE's long
term electricity needs and determined that the UAE would be unable to
produce enough gas or develop sufficient renewable capacity to meet
growing demand. After dismissing oil and coal as environmentally
unfriendly, Abu Dhabi determined that nuclear power would best serve
the Emirate's long-term electricity needs. The UAE choose to
publically renounce uranium enrichment and reprocessing (ENR). In
addition to codifying this policy in the US-UAE 123 Agreement, which
is expected to go into effort in late November, the UAE's nuclear law
(# 6/2009) published in October also bans ENR. The law also
established an independent regulator, the Federal Authority for
Nuclear Regulation (FANR),which is headed by a former US NRC
official (Bill Travers). The program has moved quickly toward
awarding a tender for the UAE's first four nuclear power plants.
There are three consortia bidding for the project: GE/Hitachi,
Korea's KEPCO, and AREVA.


7. (SBU) Concurrently, Abu Dhabi is also investing heavily in
renewable energy. The Government set a target to produce 7 percent
of total electricity demand from renewable by 2020, an effort led by
Masdar, the Abu Dhabi Future Energy Company, which is owned by
Mubadala. Masdar (Arabic for "source") has four main divisions:
Masdar Power, Masdar Carbon, Masdar Sustainable Cities and Masdar
Institute. The first invests in renewable technologies, the second
supports the reduction of carbon emissions, the third develops model

ABU DHABI 00001117 002 OF 002


zero-carbon, zero-waste cities, like Masdar City in Abu Dhabi, and
the last promotes research, through a partnership with MIT. The
selection of Abu Dhabi to host the new International Renewable Energy
Agency (IRENA) in June 2009 is in part demonstrative of Masdar's
success.


8. (SBU) Given Abu Dhabi'S energy investments, protection of these
investments is paramount. The Critical National Infrastructure
Authority (CNIA) is responsible for this task, and seeks to rapidly
develop appropriate expertise and implement advanced security
solutions. CNIA has expressed renewed interest in greater
cooperation with the United States Government, and is currently
reviewing a draft agreement for critical energy infrastructure
protection cooperation.

THE AGENDA
--------------


9. (SBU) U.S. firms are involved in almost all of the UAE's energy
initiatives, either as consultants, exporters or innovators.
However, we have only scratched the surface of USG collaboration
opportunities. The President's Cairo speech highlighted the
importance of greater science and technology cooperation with the
Muslim world. Your visit presents a unique opportunity to explore
UAE interest in such collaboration. Nuclear and renewable power
officials are particularly interested in establishing closer
relationships with the USG.
OLSON