VZCZCXYZ0000
RR RUEHWEB

DE RUEHAD #0246/01 0491255
ZNR UUUUU ZZH
R 181250Z FEB 10
FM AMEMBASSY ABU DHABI
TO RHEBAAA/DEPT OF ENERGY WASHINGTON DC
RUEHC/SECSTATE WASHDC 0319
INFO GULF COOPERATION COUNCIL COLLECTIVE
RUEHAM/AMEMBASSY AMMAN 0016

UNCLAS ABU DHABI 000246 
 
SENSITIVE 
SIPDIS 
DEPARTMENT FOR NEA/ARP, EEB/ESC/IEC/ENR (MONOSSON, SECOR), AND OES/EGC (THOMPSON) 
DOE FOR S1, S2, O???CONNOR AND SANDOLOW 
AMMAN FOR ESTH HUB (BHALLA) 
 
E.O. 12958: N/A 
TAGS: ENRG EPET SENV KGHG AE
SUBJECT: SCENESETTER FOR THE VISIT OF SECRETARY CHU 
 
¶1.  (U) Mission UAE looks forward to welcoming the Feb. 23-25 visit 
of Secretary of Energy Dr. Steven Chu. 
 
 
 
THE UAE AND THE BILATERAL RELATIONSHIP 
 
-------------------------------------- 
 
 
 
¶2.  (SBU) In the past five years, the United Arab Emirates has 
emerged as one of the economic powerhouses of the region and 
attained a commensurate level of political influence.  The UAE has 
troops in Afghanistan, is an important political player in 
Pakistan, and its support is sought by leaders throughout the 
Middle East, and further 
 
afield.  Although a tiny country, geographically and 
demographically, the UAE punches well above its weight class in 
international circles. 
 
 
 
A COUNTRY BUILT ON OIL AND GAS 
 
------------------------------ 
 
 
 
¶3.  (SBU) Most of the UAE's development, particularly in the 
Emirate of Abu Dhabi, was funded by oil revenues.  The hydrocarbon 
sector was developed years before the UAE was established (1971) 
and provide its population with a high standard of living.  Today, 
Abu Dhabi - through state-owned Abu Dhabi National Oil Company 
(ADNOC) produces approximately 2.2 million barrels per day (mbpd) 
of oil although production capacity exceeds 2.6 mbpd.  ADNOC is 
investing in increased production, largely through the application 
of advanced recovery technologies.  Abu Dhabi's main export 
destinations are Japan and South Korea.  ADNOC expects to offer new 
concessions in 2014 and 2018, potentially allowing U.S. companies 
to increase market share here. 
 
 
 
¶4. (SBU) Although the UAE exports about 4 billion standard cubic 
feet a day (scfd), the UAE's gas deposits are largely associated 
and a significant portion of production is reinjected for enhanced 
oil recovery.  The UAE has one large sour gas field, Shah, which is 
being developed by ADNOC and ConocoPhillips and could yield over 
500 million scfd.  Other projects are underway to expand existing 
gas production, however, much of this is also expected to be used 
for reinjection.  Domestic gas production is insufficient to power 
the UAE's rapid economic development.  In 2001, the UAE (then as 
the UAE Offsets Group and now as Mubadala) entered into a long term 
gas deal with neighboring Qatar.  Named Dolphin Energy, the project 
currently imports 2 billion scfd by a pipeline designed to deliver 
3.2 billion scfd. 
 
 
 
¶5. (SBU) In addition to its oil and gas production, Abu Dhabi-owned 
companies have also made significant investments in global energy 
assets.  State-owned investment corporation Mubadala purchased 
Singapore's Pearl Energy and owns assets across the Middle East and 
North Africa, as well as its Dolphin stake.  Government-owned 
International Petroleum Investment Corporation (IPIC) has made both 
domestic and international investments in refineries, pipelines, 
and other production facilities.  Abu Dhabi Energy Company ("Taqa") 
has purchased power facilities as far afield as Jamaica, invested 
in storage in Europe and owns domestic power assets. 
 
 
 
...TURNS TO GREEN ENERGY 
 
------------------------ 
 
 
 
¶6. (SBU) In 2007, Abu Dhabi Emirate began a study of the UAE's long 
term electricity needs and determined that the UAE would be unable 
to produce enough gas or develop sufficient renewable capacity to 
 
meet growing demand.  After dismissing oil and coal as 
environmentally unfriendly, Abu Dhabi determined that nuclear power 
would best serve the Emirate's long-term electricity needs.  The 
UAE choose to publically renounce uranium enrichment and 
reprocessing (ENR).  In addition to codifying this policy in the 
US-UAE 123 Agreement, which took effect in late December, the UAE's 
October 2009 nuclear law also bans ENR.  The law established an 
independent regulator, the Federal Authority for Nuclear Regulation 
(FANR), which is headed by a former US NRC official (Bill Travers). 
In December 2009, Abu Dhabi awarded a USD 20 billion tender for the 
UAE's first four nuclear power plants to Korea's KEPCO, whose 
significantly lower price beat competitors GE/Hitachi and AREVA.  A 
delegation of U.S. firms will be visiting Abu Dhabi the week of 
your visit to explore related subcontracting opportunities. 
 
 
 
¶7. (SBU) Concurrently, Abu Dhabi is also investing heavily in 
renewable energy.  The Government set a target to produce 7 percent 
of total electricity demand from renewable by 2020, an effort led 
by Masdar, the Abu Dhabi Future Energy Company, which is owned by 
Mubadala.  Masdar (Arabic for "source") has four main divisions: 
Masdar Power, Masdar Carbon, Masdar Sustainable Cities and Masdar 
Institute.  The first invests in renewable technologies, the second 
supports the reduction of carbon emissions, the third develops 
model zero-carbon, zero-waste cities, like Masdar City in Abu 
Dhabi, and the last promotes research, through a partnership with 
MIT.  The selection of Abu Dhabi to host the new International 
Renewable Energy Agency (IRENA) in June 2009 is in part 
demonstrative of Masdar's success.  Masdar CEO Dr. Sultan Al Jaber 
is very enthusiastic about your visit and hopes to finalize 
discussions about the proposed DOE-Masdar MOU to pave the way for 
signature in the coming weeks. 
 
 
 
THE POLICY 
 
---------- 
 
 
 
¶8. (SBU) While the UAE has taken a number of steps to promote 
energy diversification and green technology development and 
application, it has yet to institutionalize these efforts in 
policy.  Abu Dhabi has drafted a broad energy policy which is 
expected to be released sometime in the spring.  This policy is 
likely to be a significant shift for an OPEC member, as it is 
expected to highlight the UAE's commitment to combating climate 
change.  The UAE has not yet associated with the Copenhagen Accord, 
but is very interested in being part of future negotiations and 
plans to associate once its comprehensive review is completed. 
 
 
 
THE AGENDA 
 
---------- 
 
 
 
¶9. (SBU) More broadly, the UAE - particularly Abu Dhabi - sees 
itself as a global energy provider.  Officials recognize that the 
country was blessed with a competitive advantage in hydrocarbons 
and seek to exploit that position and knowledge as they diversify 
into clean energy production (both renewables and nuclear).  Given 
the UAE's ambitions and financial strength, we can expect the UAE 
will remain a dominant player in global energy markets. 
 
 
 
¶10. (SBU) U.S. firms are involved in almost all of the UAE's energy 
initiatives, either as consultants, exporters or innovators. 
However, we have only scratched the surface of USG collaboration 
opportunities.  The President's Cairo speech highlighted the 
importance of greater science and technology cooperation with the 
Muslim world.  Your visit presents a unique opportunity to cement 
real UAE commitments to furthering such collaboration, particularly 
with Masdar. 
OLSON