VZCZCXRO2767
PP RUEHDE RUEHDH RUEHDIR
DE RUEHMK #0162 0771312
ZNR UUUUU ZZH
P 181312Z MAR 09 ZDK
FM AMEMBASSY MANAMA
TO RUEHC/SECSTATE WASHDC PRIORITY 8548
INFO RUEHZM/GULF COOPERATION COUNCIL COLLECTIVE PRIORITY
RUEHTRO/AMEMBASSY TRIPOLI PRIORITY 0016
RUEHAD/AMEMBASSY ABU DHABI PRIORITY 1792
RHBVAKS/COMUSNAVCENT  PRIORITY
RHMFIUU/HQ USCENTCOM MACDILL AFB FL PRIORITY

UNCLAS MANAMA 000162 
 
SIPDIS 
SENSITIVE 
 
BAGHDAD FOR AMBASSADOR ERELI 
 
E.O. 12958: N/A 
TAGS: ECON EPET AE BA
SUBJECT: OCCIDENTAL TO ENHANCE PRODUCTION IN BAHRAIN'S 
AWALI FIELD 
 
REF: A. MANAMA 58 
     ¶B. 08 MANAMA 715 
     ¶C. 08 MANAMA 702 
 
¶1.  (SBU) Summary: Bahrain and Occidental Petroleum (Oxy) 
have reached an interim agreement to enhance production of 
the onshore Awali field. The final commercial agreement 
should be complete by the end of April, and Oxy hopes to 
begin ramping up operations in Bahrain by year's end.  The 
initial investment will be worth at least USD 1.5 billion, 
and could grow to as much as USD 5 billion.  Both Bahrain and 
Oxy are confident that they will be able to more than double 
Bahrain's current oil production, and significantly increase 
its natural gas production. End Summary. 
 
¶2. (SBU) On March 15, Bahrain's Minster of Oil and Gas and 
Chairman of its National Oil and Gas Authority (NOGA), Dr. 
Abdul Hussein bin Ali Mirza announced that an interim 
agreement had been reached between NOGA, Oxy, and Abu Dhabi's 
Mubadala Development Company to enhance the oil production of 
Bahrain's Awali field.  Oxy VP for Government Relations 
Daeman Harris (please protect) told Econoff on March 16 that 
the interim agreement laid out the framework for creating a 
joint venture company between the three parties, but that 
final commercial terms had not yet been agreed.  Harris said 
that negotiations were continuing and he anticipated that an 
agreement on the commercial terms would be signed before the 
end of April.  The final agreement will have to be ratified 
by Parliament prior to being signed into law by the King. 
 
¶3. (SBU) Harris said that Mubadala will participate in the 
joint venture operationally and as an equity partner. (Note: 
Mubadala has an existing oil and gas division that has active 
investments in similar field enhancement projects in Oman and 
Libya. End note.)  Harris said the initial investment in 
Bahrain would total USD 1.5 billion within the first five 
years, and over the next 20 years that number would likely 
grow to at least USD 5 billion -- making it the largest U.S. 
investment in Bahrain ever.  Both Oxy and NOGA officials are 
confident that the field enhancement project will double the 
current output of 32-35,000 bbl/day, and could easily exceed 
100,000 bbl/day.  Both parties are also hopeful that the 
project will significantly increase the production of natural 
gas associated with the field, which may be of even greater 
interest to the Bahrainis, who remain in negotiations with 
Iran to purchase natural gas (refs A, B, C). 
 
¶4. (SBU) Once the final agreement is signed into law, Oxy 
will move to begin operations, aiming to establish the joint 
venture company infrastructure by the end of the year. 
According to Harris, Oxy has already entered negotiations for 
land and the construction of a local headquarters.  While he 
anticipates that the majority of the joint-venture staff will 
be Bahraini (80-90%), Oxy plans to eventually move 20-40 
personnel to Bahrain. 
 
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Visit Embassy Manama's Classified Website: 
http://www.state.sgov.gov/p/nea/manama/ 
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HENZEL