RESOLVING THE INTERNATIONAL ENERGY FORUM

UNCLAS RIYADH 001450

SENSITIVE
SIPDIS

STATE FOR NEA/ARP, FOR S/CIEA, AND FOR EB/ESC DOUG HENGEL
DOE FOR AL HEGBURG

E.O. 12958: N/A
TAGS: EPET ENRG EINV PREL IEF SA
SUBJECT: RESOLVING THE INTERNATIONAL ENERGY FORUM
CONTRIBUTION ISSUE

REF: A. RIYADH 1397

B. STATE 104692


1. (U) Embassy Riyadh appreciates the assistance of the
Departments of Energy and State in making $100,000 available
to contribute to the International Energy Forum (IEF) expert
committee's analysis of energy price volatility. IEF
officials have told the Embassy that they very much
appreciate these funds, and strongly welcome USG
participation on the steering committee, as well as U.S.
experts on the committee.


2. (U) IEF officials have also told us, however, that they
still need to collect additional donations to ensure that the
work of the experts' group will be fully funded. In that
regard, they note that the U.S. is the only country not to
have provided all of the voluntary funds that the IEF
assessed before the experts' group began its work. They note
that the U.S. assessment was $241,000, of which $100,000 has
now been paid. IEF officials also noted that no U.S.
voluntary contributions were received for the regular budget
during FY 2009 (the IEF estimates that the U.S. share of the
annual budget is $500,000).


3. (U) The chair of the steering group, Assistant Oil
Minister Prince Abdulaziz bin Salman, told EconCouns on
October 26 that it would be "personally embarrassing" if any
delegations raised the issue of whether all steering group
members have paid. He expected that other countries would
raise the issue. We understand from our UK colleagues that
this issue came up during last week's UK-Saudi energy
bilaterals in London. Prince Abdulaziz noted that the IEF
can fund the costs of the experts' group from its operating
budget for a few months as long as it has a firm U.S.
commitment that the additional funds will come during FY 2010.


4. (SBU) Comment: From our vantage point, there seems to
have been an initial unfortunate misunderstanding about what
the U.S. was willing to contribute to the experts' group
budget. Rightly or wrongly, the chair of the steering group
- Assistant Oil Minister Abdulaziz bin Salman - now feels
personally on the hook to ensure that the U.S. contributes
its full assessment. We believe it may be useful to take a
broader view of the situation and get beyond the specific
issue of which side is right about the assessment. Prince
Abdulaziz is one of three or four key Saudi policy makers
determining the future of Saudi oil policy. He also is the
chair of Saudi Arabia's newly formed national committee on
climate change. He has told us that he would like to work
with the U.S. to forge a lasting partnership on renewable
energy and efficiency measures. He also wants U.S. support
for Saudi Arabia's long-term development, including billions
of dollars in investments in Saudi Arabia's National
Industrial Strategy and projects like Dow's refinery in the
Eastern province, and Exxon's proposed manufacturing facility
- both worth dozens of billions of dollars.


5. (SBU) Embassy Riyadh recommends Washington consider making
a firm commitment to make a second voluntary contribution of
$141,000 during FY 2010. Ideally, we would make that
commitment before the Steering Group meeting on November 14,
although disbursement could come later. That would allow
that meeting to focus on the more important issue of the
experts' group report and its recommendations, which will be
briefed to the G20 next spring and may well influence future
international energy policies. It would also enhance our
relations with a key Saudi policy maker just before the
beginning of the climate change negotiations December 6 in
Copenhagen, and would set the stage for a positive,
productive bilateral energy dialogue in December and January.





SMITH