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

C O N F I D E N T I A L SECTION 01 OF 02 DOHA 000106 
 
SIPDIS 
 
E.O. 12958: DECL: 01/22/2016 
TAGS: PREL ECON EPET ENRG KTFN EFIN QA
SUBJECT: A/S WAYNE MEETS WITH MINISTER OF ENERGY AND 
CENTRAL BANK GOVERNOR 
 
REF: DOHA 48 
 
Classified By: Ambassador Chase Untermeyer for reasons 1.4 (b) and (d). 
 
¶1. (C) Summary. Assistant Secretary for Economic and Business 
Affairs E. Anthony Wayne met separately with Second Deputy 
Prime Minister and Minister of Energy and Industry Abdallah 
bin Hamad al-Attiyah and Central Bank Governor Abdullah bin 
Khalid al-Attiyah on January 5. Treasury DAS Ahmed Saeed also 
attended the meeting with the bank governor. The Minister of 
Energy said that there was no shortage of crude in the market 
and that prices of refined products are high because of a 
lack of refining capacity. He urged the U.S. Government to 
deal with the proliferating standards of gasoline in 
different states and cities. Qatar will become the largest 
LNG supplier by 2012, when it will produce 77 million tons 
per year. He spoke proudly of long-term supply contracts with 
Europe,Asia, and the US as well as transparency in 
oil-related contracts let by Qatar. The Central Bank Governor 
noted that inflation was creeping up along with the booming 
economy. There are no plans in GCC countries to peg 
currencies to the euro instead of the dollar, he stated. He 
also pledged cooperation on terrorist finance. End Summary. 
 
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Gasoline Standards 
------------------ 
 
¶2. (C) Minister of Energy al-Attiyah made two points about 
the U.S. fuel market. A federal regulatory body is needed "to 
overrule the states," he said, on issues such as gasoline 
standards." He said there are 19 different gasoline standards 
in the U.S. including a separate standard for the Chicago. He 
also stated that gasoline prices are not related to the crude 
oil price but are driven up by the lack of refining capacity. 
 
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Crude Surplus 
------------- 
 
¶3. (C) As OPEC is producing a 1.1 million barrel a day 
surplus, al-Attiyah said, there is enough supply. He had not 
received any complaints from customers about shortages. "But 
there is a shortage in products," in part because companies 
have not invested downstream because of small profit margins. 
 
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LNG Strategy 
------------ 
 
¶4. (C) Qatar's strategy is to be the world's biggest supplier 
of LNG by 2012, when it expects to be produce 77 million tons 
per year, the minister said. With ExxonMobil, ConocoPhillips, 
Chevron, and Shell, Qatar plans to ship 25 million tons per 
year to the U.S. One-third of Qatar's production will go each 
to North America, Europe, and Asia. Characterizing LNG as 
being "more secure" than piped natural gas, he said there 
have been no delayed shipments to Japan since 1997 and that 
Qatar had also helped Japanese customers meet demand spikes. 
 
¶5. (C) Al-Attiyah said that despite Qatar's ambitions in the 
LNG sector, it isvital to protect the reserves so that they 
last at least 100 years. 
 
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Transparency 
------------ 
 
¶6. (C) Qatar welcomes foreign investment in the energy 
sector, al-Attiyah said, while avoiding agents and middlemen 
and operating its energy and petrochemical sectors 
transparently. "Corruption in the energy sector is a common 
problem" in oil-rich countries, he admitted, which is why he 
puts such importance on avoiding it in Qatar. 
 
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Related Industries 
------------------ 
 
¶7. (C) Qatar's petrochemical sector is also growing rapidly 
and the country will be the fourth-largest producer by 2012, 
according to the minister. "We believe we should not only 
export gas but also industrialize," he said. Qatar operates 
the largest fertilizer plant in the world, exporting it to 45 
countries. 
 
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Gas Pipeline to Kuwait 
---------------------- 
¶8. (C) Al-Attiyah commented on the proposed gas pipeline 
project to Kuwait. "The Saudis did not hurt us by blocking 
it," he said, because Qatar had other uses for the gas and 
has now allocated it to other markets. However, the Saudis 
did hurt the Kuwaitis, who burn huge quantities of petroleum 
to generate electrical energy, forcing them to look to Iran 
for gas supplies. He said it might be possible to revisit a 
gas pipeline to Kuwait in the years ahead but for now all 
Qatar,s gas is committed elsewhere. 
 
----------------------- 
Central Bank: Inflation 
----------------------- 
 
¶9. (C) Qatar Central Bank Governor Abdullah bin Khalid 
al-Attiyah told A/S Wayne that the bank has put some limits 
on lending, e.g., lending to speculate on the local stock 
market. He said that there has been significant growth in the 
money supply and deposits have doubled in the last four years. 
¶10. (C) Governor Al-Attiyah observed that along with its 
tremendous growth, Qatar is experiencing a significant 
increase in inflation, which rose in the last two years to 7 
percent from the 2 to 3 percent Qatar had experienced for 
many years. A major factor in the rise of inflation is the 
steep rise in commercial and residential rents. The rising 
cost of construction materials is also cited as a reason for 
the upward trend in inflation. 
 
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Currencies Pegged to the Dollar 
------------------------------- 
 
¶11. (C) All GCC countries agree that their currencies should 
be pegged to the U.S. dollar, the Governor said. The choice 
is rather simple for Qatar and other GCC countries: As oil 
and gas are sold in U.S. dollars, from an economic 
perspective it is better to use the dollar than the Euro, he 
commented. 
 
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Terrorist Finance 
----------------- 
 
¶12. (C) Qatar is doing well on matters related to terrorist 
finance, the Governor claimed because:(1) the GOQ does a good 
job of supervising charities; (2) Qatar has good laws to 
combat terrorist finance and money laundering; (3) Qatar 
recently established a Financial Information Unit (FIU) to 
monitor and investigate suspicious monetary transactions; (4) 
Charities cannot open an account without QCB approval; and 
(5) Recently Qatar joined the Egmont Group, which will allow 
it to share information with other countries on terrorist 
finance. Wayne asked about Qatar,s progress in implementing 
a cash declaration policy. The Central Bank official charged 
with the matter said a plan to require cash declarations 
entering and leaving had been developed but not yet approved 
for implementation. Wayne urged Qatar to enact it. 
 
¶13. (C) A/S Wayne expressed concern about cash carriers being 
used to subsidize terrorism. The QCB governor affirmed that 
on transactions over $100,000 the QCB would know about it, 
but agreed a cash declaration policy would help address their 
concerns. 
 
UNTERMEYER