Cablegate: Petroleum Minister Seeks U.S. Investment in Gas

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PP RUEHWEB

DE RUEHEG #1917 2781611
ZNY CCCCC ZZH
P 051611Z OCT 09
FM AMEMBASSY CAIRO
TO RUEHC/SECSTATE WASHDC PRIORITY 3787
INFO RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
RHEBAAA/DEPT OF ENERGY WASHINGTON DC PRIORITY

C O N F I D E N T I A L CAIRO 001917

SIPDIS

E.O. 12958: DECL: 10/01/2019
TAGS: ETRD ECON BEXP EPET ENRG EINV EG
SUBJECT: PETROLEUM MINISTER SEEKS U.S. INVESTMENT IN GAS
EXPLORATION

Classified By: Minister Counselor for Economic and Political Affairs Donald A. Blome for reasons 1.4 (b) and (d).
1. (C) Key Points: -- Minister of Petroleum Sameh Fahmy wants major U.S. oil companies to invest in five deepwater natural gas exploration blocks off Egypt's Mediterranean coast, according to a senior MOP official. -- Fahmy plans to travel to the U.S. in November 2009 and hopes to brief senior U.S. oil executives on the deepwater blocks, one of which has been the object of previous scrutiny by a U.S. major. -- Egypt says it will consider granting licenses on these blocks on a "direct negotiation, no-bid" basis. -- The MOP is requesting USG assistance in organizing Fahmy's visits to the Washington D.C. and Houston, to include a meeting with Secretary of Energy Chu.

2. (SBU) MOP First Undersecretary and Senior Advisor Shamel Hamdi told Econoff September 30 that Minister of Petroleum Fahmy is very interested in securing U.S. bidders on five deepwater gas exploration blocks. Hamdy said that Fahmy, who he noted has not visited the U.S. in five years, wants to travel to the Washington, DC to meet with Secretary Chu and to Houston where he hopes to brief senior U.S. oil executives on the deepwater blocks. Hamdy requested USG assistance in organizing Fahmy's travel to the U.S., particularly with outreach to U.S. companies and in arranging a meeting with the Secretary of Energy.

3. (C) Hamdy said that that the five blocks are located in an area of the Mediterranean in which independent industry analysts have reported strong natural gas potential. He offered to provide Embassy with more precise identifying data on the blocks. Hamdy noted GOE has determined that, given the extreme depth of the blocks, exploration of the area will require large-scale investments and state of the art technology that only large American companies can provide.

4.(C) Hamdy added that Egypt is prepared to be flexible on terms for a potential investor and will in the absence of multiple bidders on a specific bloc consider foregoing any bid/tender process in favor of direct negotiations. Hamdy said that the Ministry had done extensive research to confirm that, despite Egypt's long-standing practice of requiring competitive tenders from potential foreign partners, there is "no requirement in Egyptian law" that contracts be competitively bid.

5. (C) Chevron, Conoco, and Exxon were the three companies which Hamdy told econoff the Minister wants to approach while in Houston. Hamdy asserted that Chevron had previously expressed interest in one of the five blocks, but notified the MOP in April 2009 that it would not submit a bid due to company consolidation rather than the merits of the block itself.

6. (SBU) Post will follow up with NEA/ELA, Department of Energy, and Commerce in replying to MOP's request to assist with Fahmy's travel plans. Scobey

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