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Cablegate: Natural Gas Update: Bahrain Pipeline, Venezuela

This record is a partial extract of the original cable. The full text of the original cable is not available.



E.O. 12958: N/A

1. (SBU) Summary. A Ministry of Energy official told post
that a natural gas pipeline to Bahrain announced in papers in
Doha and Manama does not have much basis in reality. The
official said that Venezuela had asked Qatar to participate
in a project to supply LNG to the United States; the Qataris
reportedly said that they would be interested if the project
has commercial validity. Signed gas-to-liquids deals (with
Shell and Exxon-Mobil) are going ahead, despite reports of
postponement. End Summary.

Bahrain Pipeline?

2. (SBU) Senior Advisor to the Minister of Energy and
Industry, Abdulla Salat, told P/E Chief May 25 that Qatar has
no immediate plans to proceed with construction of a gas
pipeline to Bahrain. What had been discussed was an
arrangement to supply 400-800 million cubic feet of gas per
day. The Bahrainis had requested favorable rates for the gas
purchase, and had periodically suggested that they could buy
Iranian gas or develop their own. So, the Qataris regarded
the project as not particularly attractive since they could
market the gas elsewhere for a better price, according to
Salat. Thus, Qatar's gas that will be developed in the coming
years will be designated for other projects. Salat described
the newspaper articles as a political action to demonstrate
sound relations between the countries.

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3. (SBU) Salat said that Qatar is experiencing strong demand
for its gas, to the extent that current gas customers must
compete for any increased shipments. Qatar is looking for the
best price while taking into consideration risk factors.
Salat explained that contrary to recent reports,
gas-to-liquids (GTL) projects already signed will proceed.
The signed projects are with Shell and Exxon-Mobil. Projects
that had been under discussion will be put on hold. Salat
said that this was because GTL had a higher risk associated
with it, and Qatar could market its gas as LNG and sell to
reliable customers at a good price with low risk.

What's Happening to the Reserves

4. (SBU) A key element that emerged from the discussion was
that Qatar has plenty of gas customers, and that gas coming
on-line in the near term is fully allocated, including gas
proposed for the pipeline to Kuwait. Salat mentioned
expansion of the Dolphin project (a pipeline to the United
Arab Emirates) as an example of how gas had been
re-allocated. Note: Qatar may be holding back on overly rapid
expansion of gas exploitation while it analyzes the reserves
in the North Field, and how extraction is affecting the
subsurface flow. End Note.


5. (SBU) P/E Chief asked if there was an energy component to
Qatar's relationship with Venezuela. (The Emir, Sheikh Hamad
bin Khalifa Al Thani, met with President Chavez while in
Brazil for the Arab-Latin America Summit, and Chavez visited
Qatar earlier in the year.) Salat replied that the
Venezuelans had invited the GOQ to invest in a project to
supply LNG to the United States. The Qataris answered that
they would be interested if the project is commercially
viable. Salat did not believe anything would come of the
idea. COMMENT: While a rapidly growing energy supplier, Qatar
remains a small producer within OPEC. Political or economic
interactions with Venezuela could be a way to raise its
profile and test its political weight within the organization
and in the larger world of energy. END COMMENT.

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