VZCZCXRO5574
PP RUEHDE RUEHDIR
DE RUEHMK #0666/01 1990558
ZNY CCCCC ZZH
P 180558Z JUL 07
FM AMEMBASSY MANAMA
TO RUEHC/SECSTATE WASHDC PRIORITY 7029
INFO RHMFISS/HQ USCENTCOM MACDILL AFB FL PRIORITY
RUEADOE/USDOE WASHDC PRIORITY
RHBVAKS/COMUSNAVCENT  PRIORITY
RUCPDOC/USDOC WASHDC PRIORITY
RUEHZM/GULF COOPERATION COUNCIL COLLECTIVE PRIORITY

C O N F I D E N T I A L SECTION 01 OF 02 MANAMA 000666 
 
SIPDIS 
 
SIPDIS 
 
NEA/ARP, EEB/ESC/IEC/EPC FOR GLENN GRIFFIN 
COMMERCE FOR 4520/ITA/MAC/ONE/THOFFMAN 
 
E.O. 12958: DECL: 07/15/2017 
TAGS: ECON ENRG EPET ETRD PGOV PREL BA ECTRD REGION
SUBJECT: OIL MINISTER HIGHLIGHTS EXPLORATION PLANS, LOOMING 
GAS SHORTAGE 
 
REF: A. MANAMA 600 
 
     ¶B. MANAMA 419 
     ¶C. DOHA 202 
 
Classified By: Ambassador William T. Monroe, reasons 1.4 (b) and (d). 
 
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SUMMARY 
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¶1. (C) Minister of Oil and Gas Affairs Mirza briefed the 
Ambassador July 11 on the strong interest shown by 
international oil companies in pursuing exploration tenders 
in Bahrain.  Mirza hoped that offshore exploration would lead 
to discoveries of gas, which could ease a looming gas 
shortage that Bahrain would begin to feel in 2010.  Stressing 
that getting sufficient natural gas was an issue of national 
interest, he expressed hope that the USG could sway 
ExxonMobil to provide Qatari gas to Bahrain.  End Summary. 
 
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CONSERVATISM DETRACTS FROM OVERALL PROGRESS 
------------------------------------------- 
 
¶2. (C) The Ambassador, in his July 11 farewell call to 
Minister of Oil and Gas Dr. Abdul Hussein Ali Mirza, 
commended Bahrain for its openness and progress on trade 
issues in the wake of FTA implementation.  However, he 
pointed to the discordant note struck by certain initiatives 
such as recent moves to ban alcohol and conservative 
parliamentarians' opposition to Bahrain's "Spring of Culture" 
(a series of cultural events featuring artistic, yet 
suggestive, modern dance performances condemned by 
Islamists). 
 
¶3. (C) The Ambassador wondered if this might have an impact 
on Bahrain's plans to promote the country for tourism and as 
a regional hub for western countries to operate out of.  "You 
told us to pursue democracy - that's what democracy will do," 
Mirza replied.  However, he noted that the Shura Council 
served to temper agendas that might be advanced by 
extremists.  He also said there were influential Bahraini 
liberals who opposed the extreme agendas of the Islamist 
block and predicted that the make-up of the next elected 
parliament would reflect a popular backlash against 
conservative elements. 
 
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OIL EXPLORATION PROSPECTS REVIEWED 
---------------------------------- 
 
¶4. (C) The Ambassador asked about press reports which 
indicated that several oil companies were preparing to bid 
for exploration concessions on four offshore blocks that were 
up for tender (Ref. B).  Mirza stated that 24 oil company 
officials had visited Bahrain to view the seismic field data. 
 He said there were nearly 60 additional companies who had 
also expressed interest in the tender.  Interested companies 
would need to submit their bids by September 19th.  The 
National Oil and Gas Authority, which he chairs, hoped to 
announce the winning bid or bids by year-end.  Mirza said 
prospects were good for new oil and gas discoveries in the 
off-shore blocks.  Development was very commercial under 
current pricing. 
 
¶5. (C) Mirza said that, apart from the four offshore blocks 
tender, from six to ten selected companies would be invited 
to bid on a project to develop Bahrain's Awali field. He 
noted that there had been no fresh oil discoveries in Bahrain 
since the discovery of the Awali field in 1932, but he added 
that Bahrain has a large quantity of unrecoverable proven 
reserves.  He said that one of the prospective invitees, a 
well-known American firm which he declined to name, had 
promised to double Bahrain's recoverable reserves.  That bid 
will close in October. 
 
¶6. (C) The Ambassador asked what conditions were contributing 
to such strong interest on the part of foreign oil companies 
to explore in Bahrain.  Mirza identified four factors. 
First, the transparency of the Tender Board assured bidders 
that they would have a genuine opportunity to compete in 
Bahrain; second, exploration technology has improved to the 
point that previously inaccessible reserves can be discovered 
and exploited; third, oil companies realized that all of the 
easily recoverable oil has already been discovered, and 
 
MANAMA 00000666  002 OF 002 
 
 
fourth, oil that could not have been cost-effectively 
recovered when oil was trading at $10 per barrel was now 
quite attractive at $70 per barrel. 
 
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IRANIAN GAS IRRESISTIBLE? 
------------------------- 
 
¶7. (C) While Mirza was optimistic that offshore exploration 
could lead to fresh discoveries of gas, he noted Bahrain's 
looming acute need for gas beginning in 2010.  He said that 
by 2012 Bahrain would need an additional billion cubic feet 
of gas per day.  The country currently produces 1.4 billion 
cubic feet per day and has plans that would raise this figure 
to 1.7.  Mirza said he had initially been cheered by reports 
that ExxonMobil had released an allocation of Qatari gas 
(Ref. C).  However, when Bahrain offered to buy the gas, 
Qatari officials responded that it had already been 
reallocated.  Nevertheless, the Qataris promised that Bahrain 
would be first in line for any new gas commitments after a 
study reviewing its existing commitments was completed. 
 
¶8. (C) The Ambassador expressed continuing concern over 
reports of Bahrain's discussion on acquiring gas from Iran 
(Refs. A and B).  Mirza responded that the GOB would prefer 
not to acquire Iranian gas, but said that if Bahrain were 
unable to acquire gas from its preferred supplier, Qatar, 
then Bahrain would have no choice.  "Qatar and Iran are our 
only two possibilities."  He continued that it was up to 
Bahrain alone to ensure that its future needs were met. "If 
we run out of gas, nobody will help us."  Mirza then relayed 
an observation passed to him by a third-country diplomat, who 
suggested that "if the U.S. doesn't like the idea of 
Bahrain's acquisition of Iranian gas, it should put pressure 
on ExxonMobil to supply gas to Bahrain."  He noted that 
ExxonMobil has a relationship with Qatar Petroleum. 
 
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COMMENT 
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¶9. (C) Bahrain's future needs for gas will be acute.  Without 
additional supplies, the country will soon face power 
outages.  Anything that can be done to encourage ExxonMobil 
and/or the Government of Qatar to meet Bahrain's supply needs 
would certainly be beneficial. 
 
 
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Visit Embassy Manama's Classified Website: 
http://www.state.sgov.gov/p/nea/manama/ 
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MONROE