KUWAIT NEEDS THE IOCS

UNCLAS KUWAIT 000967 SENSITIVE SIPDIS DEPARTMENT FOR NEA/ARP, EEB/ESC, S/CIEA E.O. 12958: N/A TAGS: EPET ENRG KU SUBJECT: KUWAIT NEEDS THE IOCS REF: KUWAIT 831 ¶1. (SBU) Kuwaiti Minister of Oil Sheikh Ahmad Al-Sabah briefed Ambassador on Kuwait's oil expansion plans during the opening of the 3rd International Energy and Petrochemical Exhibition. He told the Ambassador -- and the press -- that Kuwait needed to bring in International Oil Companies (IOCs) to be able to meet its goal of producing 4 million barrels per day (mmb/d) by 2020. (Note: He had originally told the press that Kuwait would need to slip its production goal until 2030, but retracted his remarks the next day. His remarks about manpower shortages track with what post has heard from other oil sector officials. According to one Kuwait Petroleum Company official, Kuwait now has 46 drilling rigs, but is struggling to find trained operators. The official was unsure as to how Kuwait would man the 80 rigs (total) that it wanted to have operational. End note.) ¶2. (SBU) Sheikh Ahmed stated that he did not see that OPEC would increase its production during the December meeting, noting that prices appeared to have stabilized. In response to a question from reporters, he expressed concern about increased production from Non-OPEC members putting downward pressure on the market, specifically citing Russia's increase in production to 9.8 mmb/d. He also categorically dismissed newspaper reports that OPEC states were in secret talks to move to pricing oil in dollars. ¶3. (SBU) Sheikh Ahmed told Ambassador that the talks with China about the planned refinery joint venture were proceeding well, and that the Chinese had identified a new property that did not present the same environmental concerns. (Note: Dow is a potential partner with a 10% stake. End note.) He also denied reports that Kuwait and Iraq were cooperating on cross-border oil projects. ¶4. (SBU) Comment: We are mildly encouraged by Sheikh Ahmed's public remarks that Kuwait needs the IOC's to meet its long term oil production goals. They track with what we have long heard privately from other oil sector officials (reftel). This does not mean, however, that Kuwait is moving toward considering concessions or production sharing agreements. Given the long standing political disputes over the oil sector, his remarks are also not likely to translate quickly into forward movement with the IOCs. We are also struck by the speed in which he "revised and extended" his remarks about Kuwait's long-term oil production plans. Sheikh Ahmed is known for speaking "off the cuff;" in this case, it appears as if he was "off the reservation." ********************************************* ********* For more reporting from Embassy Kuwait, visit: visit Kuwait's Classified Website at: http://www.intelink.sgov.gov/wiki/Portal:Kuwa it ********************************************* ********* JONES