VZCZCXYZ0000
PP RUEHWEB

DE RUEHKU #0123/01 0420535
ZNR UUUUU ZZH
P 110535Z FEB 10
FM AMEMBASSY KUWAIT
TO RUEHC/SECSTATE WASHDC PRIORITY 4584
INFO RUEHZM/GULF COOPERATION COUNCIL COLLECTIVE PRIORITY
RHEBAAA/DEPT OF ENERGY WASHDC PRIORITY

UNCLAS KUWAIT 000123 
 
SENSITIVE 
SIPDIS 
 
STATE FOR NEA/ARP, EEB/ESC/IEC 
ENERGY FOR GINA ERICKSON 
 
E.O. 12958: N/A 
TAGS: EPET ENRG PGOV KU
SUBJECT: NEW SUPREME PETROLEUM COUNCIL MEETS -- ROOM FOR 
PROGRESS? 
 
REF: 09 KUWAIT 338 
 
¶1. (SBU) Summary: On February 8, one day after its 
appointment, Kuwait's Supreme Petroleum Council met and 
reportedly approved a technical services agreement with 
Shell.  The decree appointed the 18 member (8 government, 10 
private sector) oil policy making body, which had not met 
since December 2008, when four members resigned in protest 
over the cancellation of the K-Dow joint venture.  The lack 
of an SPC had prevented the Kuwait Petroleum Corporation from 
moving forward with major projects, including the 
re-tendering of Kuwait's 4th oil refinery and major upgrades 
to the existing refineries. Despite some calls for the SPC to 
become a purely governmental body, the Amir appointed private 
sector representatives and reappointed five of the 
non-governmental members from the 2005-2008 SPC.  End Summary 
 
¶2. (SBU) On February 7, the Official Kuwait Gazette published 
Amiri Decree 51/2010 forming the Supreme Petroleum Council 
(SPC), effective on February 3.  The SPC will have 18 
members, eight from the government and 10 from the private 
sector.  The Amiri decree came around three months after the 
formal completion of the SPC's term in October 2009.  The 
decree also came over a year after the SPC last met in 
December 2008, when four members resigned in protest after 
the SPC cancelled the K-Dow joint venture.  According to 
Kuwait Petroleum Corporation Deputy Managing Director and 
General Counsel Sheikh Nawaf Al-Sabah, he had told the four 
members that their resignations could not become effective 
until the Amir accepted them.  Their response was "fine we 
won't come to meetings."  Sheikh Nawaf noted that after the 
cancellation of the 4th refinery project and the K-Dow joint 
venture the SPC had been generally reluctant to meet in any 
case. 
 
¶3. (SPC) The SPC is Kuwait's oil policy setting body and 
approves all major projects.  Sheikh Nawaf noted that, 
although the 5-year KPC budget of around $80 billion had been 
approved, absent SPC approval, none of the major projects in 
the budget could move forward.  KPC board approvals of 
projects such as the retendering of the 4th refinery and the 
projects to upgrade Kuwait's existing refineries to produce 
cleaner fuels were "pending SPC approval."  On February 9, 
ExxonMobil Kuwait President John Hoholick told Econcouns that 
the SPC had already met and that one of his SPC contacts had 
told him that it had approved a technical services agreement 
with Shell Oil Company to develop the Sabriyah Gas field. 
(Note:  Chevron and BP have both pulled out of Kuwait because 
they could not make the TSA model work financially.  For 
their part, ExxonMobil officials have told us that they also 
do not view TSAs as an attractive option, given competing 
calls on their resources.  End note.) 
 
¶4. (SBU) There had been parliamentary criticism of the SPC, 
due to the potential conflicts of interest facing the private 
sector members of the SPC, who might have oil sector related 
companies competing for contracts.  According to Sheikh 
Nawaf, there had been discussions and some calls to remove 
all private sector members and return the SPC to the status 
it enjoyed in the 1970s as a government policy body.  Despite 
these concerns, the Amiri decree renamed the five private 
sector members who had not resigned in 2008. 
 
5 (U) Government Members of the SPC 
 
--Prime Minister Sheikh Nasser Mohammed Al-Sabah, Chairman 
--Deputy Prime Minister/Foreign Minister Sheikh Dr. Mohammed 
Al-Sabah 
--Deputy PQQeC}kQ[>_}z#Qe Affairs Sheikh Ahmad 
Al-Fahad Al-Sabah 
--Minister of Oil Sheikh Ahmed Al-Sabah 
--Minister of Commerce and Industry Ahmad Rashed Al-Haroun, 
--Minister of Finance Mustafa Al-Shamali 
--Minister of State for Cabinet Affairs Roudhan Al-Roudhan 
--Central Bank Governor Sheikh Salem Al-Sabah 
 
¶6. (SBU) Non-Government Members of the SPC 
 
--(New Member) Sheikh Sabah Al-Khaled Al-Sabah: Former 
Minister of Information and Social Affairs and Labor. 
Currently an advisor in the Amiri Diwan.  His cousin is the 
First Deputy Prime Minister and Minister of Defense 
 
-- Sulaiman Nisf Al-Omani:  Former Undersecretary of the 
Ministry of Oil from the late 1990s. 
 
-- (New Member) Abdulmohsin Al-Hunaif:  Chairman of the 
 
Industrial Bank of Kuwait, a majority government owned bank 
that provides both conventional and Islamic financing for the 
establishment and modernization of Kuwait's industrial 
sector.  He is also a former Under Secretary of the Ministry 
of Finance 
 
-- Dr. Ali Mohammed Akber: Chairman of the Petroleum and 
Environmental Services Company, with a PHD in Petroleum 
Engineering from the University of Missouri (1973).  He is an 
adjunct professor of the Petroleum Engineering Department at 
Kuwait University and a former Dean of the College of 
Engineering.  He is a cousin of Kuwait Energy CEO Sara Akbar. 
 
-- Dr. Emad Al-Ateeqi: Kuwait University Professor, former 
dean of Kuwait University's College of Engineering, and is 
the Chairman of the Private Universities Council 
 
-- (New Member) Issa Al-Mazidi:  Shi'a former Minister of Oil 
 
-- Dr. Mohammed Al-Duwaiheis:  former Minister of Planning 
 
-- Hisham Al-Otaibi: Chairman and Managing Director of the 
Contracting and Marine Services Company, a former Minister of 
Commerce and Industry, and Director General of the Kuwait 
Stock Exchange.  He holds a BS degree in engineering from 
Oklahoma University. 
 
-- (New Member) Dr. Nayef Al-Hajraf:  He is an Assistant 
Professor and the Assistant Vice President for Academic 
Services at the Gulf University for Science and Technology. 
He holds a BS decree in accounting from Kuwait University, an 
MS in accounting from the University of Illinois, and a PHD 
in accounting from the University of Hull. 
 
-- (New Member) Mohammed Mahmoud Al-Hajri:  The Chairman of 
the Kuwait Association for Accountants and Auditors and a 
former director of the Financial Department of Kuwait 
National Petroleum Company.  He is the editor in chief of 
Accountants Magazine and has a bachelor's degree in 
accounting from Kuwait University. 
 
¶7. (SBU) Comment:  The long awaited appointment of the SPC 
and its quick action to approve a TSA for Shell are a 
guardedly welcome sign of progress in the oil sector. 
Kuwait's ambitious plans to develop its oil production 
capacity to 4 million barrels per day by 2020 and to upgrade 
its refining capacities were largely stalled in the absence 
of the SPC.  That said, GOK-parliamentary sniping contributed 
to the cancellation of both the K-Dow and 4th refinery deals, 
despite the existence (and initial support) of the SPC.  In 
addition, constitutional prohibitions on foreign investment 
in Kuwait's upstream oil and gas sector and antiquated 
tendering regulations, combined with a parliamentary focus on 
how the oil sector spends the country's money, will continue 
to make it difficult to move major projects forward quickly. 
It remains an open question, therefore, as to how much 
progress the new SPC will indeed be able to make.  End 
Comment. 
 
 
********************************************* ********* 
For more reporting from Embassy Kuwait, visit: 
visit Kuwait's Classified Website at: 
 
http://www.intelink.sgov.gov/wiki/Portal:Kuwa it 
********************************************* ********* 
JONES