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WikiLeaks: Oman secret plans to take gas fields away from Royal Dutch Shell

By John Donovan

Secret cable from U.S. embassy in Muscat records a meeting in March 2008 between U.S. Admiral William J. Fallon and Sultan Qaboos. During the meeting, the Sultan expressed concerns about Iran and also revealed intent to “boost production by taking smaller and less productive gas fields away from Petroleum Development Oman (PDO) — 60% owned by the government and 34% owned by Royal Dutch Shell — and awarding them to outside companies such as
British Gas and BP.”


Reference ID: 08MUSCAT174 Created: 2008-03-01 05:05 Released: 2010-11-28 18:06 Classification: SECRET//NOFORN Origin: Embassy Muscat

DE RUEHMS #0174/01 0610549
P 010549Z MAR 08

S E C R E T SECTION 01 OF 03 MUSCAT 000174 



E.O. 12958: DECL: 03/01/2018

Classified By: Ambassador Gary A. Grappo for Reasons 1.4 (b, d) 


1.  (C) Sultan Qaboos discussed both domestic and regional
issues during his February 19 meeting with Admiral William J.
Fallon, CENTCOM Commander.  On the domestic front, the Sultan
described his desire to empower the government to be more
responsive to citizen concerns.  Seeking to strengthen the
role of Omani women, the Sultan plans to convene a conference
in 2009 designed to increase the participation and leadership
of women in all aspects of Omani society.  Sultan Qaboos also
shared plans for continued infrastructure development in Oman
and described efforts underway to obtain more natural gas.
On Iraq, the Sultan advised against a premature withdrawal of
U.S. forces and stated that more regional assistance would be
forthcoming if Iraqis would "come together" to take charge
of, and invest in, their own country.  Sultan Qaboos shared
U.S. concerns about Iranian meddling in Iraq and elsewhere,
but contended that Tehran knew confrontation with the U.S.
was not in its interest.  Iran's "charm offensive" in the GCC
had succeeded in lessening suspicions of some officials about
the true intentions of Iranian policies.  End Summary. 

2.  (C) CENTCOM Commander Admiral Fallon, accompanied by the
Ambassador, met February 19 with Sultan Qaboos bin Sa'id for
approximately 2 hours at one of the Sultan's castles -- Husn
al Shumugh -- in the interior of Oman.  (Note:  The Sultan
was outside of Muscat on his annual 4-6 week "meet the people
tour" during which he visits selected sites outside the
capital.  End Note.)  The Sultan appeared in good health and
was cheerful, although he commented that his role as ruler of
Oman was demanding and did not allow him time to do all the
things he wanted to do, such as reading more books.  "My
office is wherever I am," he stated, noting that he
constantly had to attend to paperwork and urgent requests
from his staff, among other tasks.  The Sultan added that
despite his busy schedule, he always made time to "watch the
news," though he did not elaborate on his preferred media


3.  (C) The Sultan expressed concern over a premature
withdrawal of U.S. forces from Iraq.  Recognizing recent
improvements in the security situation, he counseled that
American troops should only leave "when the time is right."
He stressed that Iraqis had to "take charge" of the fate of
their country, but questioned whether the different factions
would be able to "come together" to accomplish this.  He
pointedly asked the Admiral, "Do you really think Prime
Minister Maliki and his government are capable of pulling the
country together?"  The Sultan did not directly respond to
Admiral Fallon's comment on the need for assistance and
investment for Iraq from elsewhere in the region.  Instead,
he stated that if the Iraqi people helped themselves and
invested in their own country, others would follow suit. 

4.  (C) The Sultan appeared to follow events in Iraq closely.
 He commented, for example, that the Kurds had apparently
"come out well" in recent central government talks on budget
issues, and asked about the status of electricity production
in Iraq.  The Sultan seemed to take a particular interest in
Admiral Fallon's discussion of Iraqi Shia leader Abdul Aziz
al-Hakim, including the status of Hakim's health and his
possible successors. 


5.  (C) In addition to emphasizing the need for outside
investment in Iraq, Admiral Fallon highlighted the importance
of assistance from regional states for infrastructure
development in Afghanistan and other Central Asian nations.
Again the Sultan sidestepped the issue and shifted the
conversation to the critical role of roads and highways in
economic development.  He then mentioned infrastructure
projects for Oman currently under consideration, including
construction of a new dam and a freight rail line from the
northern port of Sohar to the planned port in Duqm.  The
Sultan hoped that the southern port of Salalah could be
linked by rail to Muscat and, eventually, to other GCC

MUSCAT 00000174  002 OF 003  


6.  (C) The Sultan commented that the Iranians are "not
fools," and claimed that Tehran realized there are "certain
lines it cannot cross" (i.e., direct confrontation with the
U.S.).  Regarding GCC relations with the Iranian government,
he stated, "Iran is a big country with muscles and we must
deal with it."  He continued that Iran's "charm offensive" in
the region had achieved a degree of success as some GCC
authorities (he did not mention names) were now less
suspicious of Iranian intentions.  The Sultan added,
laughing, that "I must say that as long as (the U.S.) is on
the horizon, we have nothing to fear." 

7.  (C) Responding to Admiral Fallon's frustration with
Iranian interference in Iraq, the Sultan remarked that
Iranian meddling abroad was "almost a game" to the regime in
Tehran, and said that Iran's leaders would have to stop this
practice if Iran wanted to "join the world as a noble
country."  The Sultan hoped that Iraqi leaders would clearly
tell and convince Iranian President Ahmadinejad during his
upcoming visit to Iraq to cease Iran's unhelpful interference
in their internal affairs.  On the possibility that Iran is
waiting out the President's final term before re-assessing
its strategy, the Sultan said that Tehran should realize that
it has to deal with the U.S. as a country, and not just the
current administration. 


8.  (C) After noting Iranian dependence on imports of refined
fuel, the Sultan described Oman's efforts to obtain more
natural gas to fuel growing domestic power needs and
large-scale industrial projects.  Oman had committed too much
of its limited gas production to long-term liquefied natural
gas (LNG) export contracts.  As a result, the government was
trying to boost production by taking smaller and less
productive gas fields away from Petroleum Development Oman
(PDO) -- 60% owned by the government and 34% owned by Royal
Dutch Shell -- and awarding them to outside companies such as
British Gas and BP.  The Sultan claimed these firms were in a
better position to increase productivity in these fields, and
pointed to the progress of U.S.-based Occidental Petroleum
Company in raising oil production in former PDO concession
areas, such as Mukhaizna. 

9.  (C) Looking offshore, the Sultan said he hoped that new
gas fields would be found in the Gulf of Oman to help ease
the country's natural gas shortage.  India's Reliance
Industries was currently exploring a deepwater oil and gas
block in this body of water, but had made no significant
discoveries yet.  Qatar would begin supplying gas to Oman by
2013, the Sultan noted, but not in quantities sufficient to
meet outstanding needs.  He added that Oman was still
supplying limited gas from Musandam to Ras al-Khaimah in the
UAE due to an agreement he made with its emir -- and which
the Sultan felt he could not break -- well before Oman was
squeezed for this resource. 


10.  (C) Sultan Qaboos shared that he placed a great deal of
importance on education, and noted that a study of history
provided the context needed to better understand present
trends and events.  Regarding claims that some rulers in the
region wanted to keep their people uneducated in order to
more easily control them, the Sultan explained that this
strategy could easily backfire as it also left the populace
more susceptible to influence by extremists, such as the
Muslim Brotherhood.  Former Egyptian president and
pan-Arabist leader Gamal Abdal Nasser, the Sultan said, had
"set the region back" by being "anti-everything" and engaging
in vitriolic rhetoric designed to keep the masses ignorant. 


11.  (C) On domestic politics, the Sultan announced that he
would hold the first-ever combined meeting of his Cabinet of
Ministers and the Majlis al-Shura (the directly elected lower 

MUSCAT 00000174  003 OF 003  

house of Oman's bicameral advisory body) on February 26.  By
meeting together, the Sultan hoped that the Cabinet and the
Majlis would learn how to cooperate better and jointly focus
on important issues.  He commented that both bodies also
needed to "demonstrate more leadership" and avoid past
foot-dragging on promises made to the populace.  "People need
to see the results of decisions," the Sultan stated. 

12.  (C) Letting Admiral Fallon and the Ambassador in on a
"secret," the Sultan confided that he planned to call for a
conference of all "notable women" in Oman in 2009 in a bid to
encourage Omani women to expand their participation and
leadership in different aspects of Omani society.  Minister
of Social Development, Dr. Sharifa bint Khalfan al-Yahyaiya
(one of Oman's three female cabinet ministers) will chair the
meeting on the Sultan's behalf.  Lamenting that no women won
seats in the October 2007 election for the Majlis al-Shura,
Sultan Qaboos observed that Omani women were stuck in
tradition and needed to be empowered to "take more charge"
and to be "less shy."  "Some customs (regarding women)," he
added, "shouldn't be kept."  Nevertheless, gradual change is
occurring in Oman, the Sultan asserted.  His philosophy was
to "let it happen," rather than hold it up to public debate,
as the latter course of action often led to factional
fighting, internal strife, and other ills. 


13.  (C) In concluding the meeting, Sultan Qaboos returned to
his goal of improving the responsiveness of the Omani
government to citizen concerns.  He stated that he would be
pressing "harder" on his ministers to engage in more and
better public relations efforts before the Omani police and
to effectively enforce their decisions so that the people
could see the benefits of announced actions.  Giving one
particular example, the Sultan said that rather than simply
announce a new development project, the government should
explain the downstream employment opportunities the project
would generate for Omani citizens.  Effective cooperation
between ministries and the Majlis Oman was also needed to
strengthen the civil institutional framework in Oman, the
Sultan added. 


14.  (S/NF) In discussing his desire for operational change
in the senior government ranks, the Sultan twice implied (but
did not directly state) that such change was needed to
prepare the country for his eventual departure from power.
The Sultan's comments indicated that he may feel the
government is too dependent on his authority and should be
empowered to run more effectively without constant direction
from the palace.  End Comment. 

15.  (U) This message has been reviewed by Admiral Fallon.
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