A WALTZ WITH SHAYKH AHMED: OIL/INFO MINISTER LETS

C O N F I D E N T I A L SECTION 01 OF 02 KUWAIT 000756

SIPDIS

NEA/ARP, NEA/I

E.O. 12958: DECL: 07/27/2019
TAGS: PREL PGOV ENRG EINV KWIR EPET KU IZ
SUBJECT: A WALTZ WITH SHAYKH AHMED: OIL/INFO MINISTER LETS
AMB LEAD ON OIL, SIDESTEPS FREQUENCY ISSUE

REF: A. KUWAIT 708

B. KUWAIT 338

Classified By: DCM Tom Williams for reasons b and d.


1. (C) Summary: The dual-hatted Kuwaiti Oil/Information
Minister Shaykh Ahmed Abdullah Al-Ahmad Al-Sabah told the
Ambassador July 27 that Kuwait wants to obtain international
expertise in developing its oil projects, mentioning that
ExxonMobil is likely to oversee production in the Burgan oil
field and that Kuwait will likewise partner with
international firms to boost the Sabriyah gas field project's
output. Ambassador emphasized U.S. interest in partnering
with Kuwait on future oil projects, highlighting the mutual
benefit inherent in such collaboration. On LNG imports,
Shaykh Ahmed said that Qatargas' terms were unacceptable and
that Kuwait will deal with Shell for the duration of the
short-term import project. Regarding Asia deals, Shaykh
Ahmed stated that Kuwait has started a refinery project in
Vietnam adding to the already existing China project.
Ambassador raise the frequency issue for Radio Farda, noting
that the broadcasting tower would be completed soon, but the
Minister punted (septel, notal). Shaykh Ahmed concluded by
raising the issue of Iraq's reparations, saying the Amir
would likely raise this in his meeting with POTUS. End
Summary.

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Burgan, Sabriyah, and International Partnerships
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2. (C) Shaykh Ahmed offered that he had met with ExxonMobil
the previous week, stating that their expertise was needed in
assisting with production at the depleting Burgan oil field
(Ref B). Shaykh Ahmed went on to say, however, that a
definitive deal between Kuwait and Exxon was still "a matter
of time." Regarding the Sabriyah gas field, Shaykh Ahmed
acknowledged that Kuwait needed international expertise in
developing the project, dismissing the notion that Kuwait
could keep the operation in house. Capitalizing on the
subject of international partnerships, Ambassador emphasized
U.S. interest in working with Kuwait on future oil projects,
underscoring the mutual benefit of such relationships.

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LNG Imports, Asia Deals, and Al Zour Fourth Refinery
-------------- --------------


3. (C) Responding to Ambassador's inquiries on LNG imports,
Shaykh Ahmed stated that Qatargas' terms were not acceptable
and offered that Kuwait would work with Shell for the
duration of the short-term project. The Shaykh went on to
emphasize that this was an interim project, required only to
meet heightened electricity demand this summer. (Note: the
GOK recently announced a deal with Shell to import LNG during
summer 2009, after talks with Qatargas were called off
earlier this year. End Note.) On Asia deals, Shaykh Ahmed
stated Kuwait has started a new refinery project in Vietnam,
adding to the existing project in China. Shaykh Ahmed had no
update regarding the Al Zour Fourth Refinery, indicating that
the tender process was at a standstill but not canceled.
Shaykh Ahmed took the opportunity to say that he is working
on establishing new relations with Parliament so that similar
impasses are not repeated.

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What's the Frequency, Ahmed?
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4. (C) Ambassador noted in passing that the broadcasting
tower for Radio Farda is nearing completion and offered the
Minister a tour of the facility once finished. She asked the
Minister for formal approval of the earlier submitted
frequency request, but Shaykh Ahmed punted to FonMin Dr.
Mohammed for a response. (See Septel, Notal for further
details on this issue.)

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Iraq
--------------


5. (C) Shaykh Ahmed concluded by voicing concern over the
Iraq reparations issue, which would likely be raised by the
Amir in his August 3 meeting with POTUS. The Ambassador
responded by emphasizing the U.S. commitment to Kuwait and
our unwavering commitment to UNSCR 833. On the specifics of
reparations, the Ambassador noted this ultimately was a
matter for the UN Security Council, but made the case for GOK
flexibility since Iraq is facing economic difficulties that

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could threaten its future development and stability. Both
Kuwait and the US share an interest in strengthening Iraq so
that it acts as a stable neighbor and bulwark against Iran,
she observed.

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JONES