Saudi asked US to intervene on lawsuits against Aramco over alleged oil price-fixing, reveals leaked diplomatic cables
Saudi Arabia in 2007 threatened to pull out of a multi-billion dollar Texas oil refinery investment unless the US government intervened to stop state company Saudi Aramco being sued in US courts for alleged oil price fixing, according to US diplomatic cables seen by Wikileaks.
Deputy Saudi Oil Minister Prince Abdulaziz bin Salman Al Saud at a July 8 meeting with US embassy staff in Riyadh said he wanted the US to grant Saudi Arabia sovereign immunity from lawsuits by ordering a Dept of Justice statement of interest (SOI) on its behalf, one cable said.
"[Abdulaziz] told us that King Abdullah specifically had raised the lawsuit issue with Vice President [Dick] Cheney during his May visit and that the Saudi government would judge the Administration's willingness to file an SOI as a test of good faith," the cable said.
"Prince Abdulaziz perceives the lawsuits as a threat right now, one that could derail the expansion of the Port Arthur refinery, possibly by the end of the summer," it said.
At a meeting on July 16 in Riyadh, US ambassador Ford M Fraker told Abdulaziz that the Saudi request was "receiving serious consideration."
The cable reported Abdulaziz saying: "Our final decision hinges on what reasons we have to pursue investment. We are facing daunting [court] cases. We are pursuing the engineering but we need solid intervention from the USG [US government] to have the comfort we need for this project."
Saudi Aramco at the time was considering the doubling of capacity at the Motiva refinery in Port Arthur, Texas, a joint venture with Shell. It approved the investment in September 2007 and the $7bn expansion is due online in 2012.
Oil prices rose from $60 to $90 a barrel in 2007 and Saudi Aramco was taken to court in a number of US district courts on allegations of price fixing in concert with the Organization of the Petroleum Exporting Countries.
OPEC controls output by setting production targets for member countries and came under fire in 2007 and 2008 as oil prices set successive record highs. By 2008 it was pumping close to full capacity. Saudi Arabia is OPEC's biggest producer.
Abdulaziz called the growing number of cases against Aramco "frustrating and financially draining."
No statement of interest was issued but a Texas lower court in 2009 ruled against a class action versus OPEC producers, saying the lawsuits were barred by the act of state doctrine, which bans judgements that interfere with how sovereign nations control their natural resources. That judgement was upheld this week by the US Court of Appeals.
The cables also reported Saudi concerns in 2007 about legislation in Congress against OPEC price fixing, the so-called NOPEC bill.
The bill, passed by the House of Representatives but subsequently blocked by the Senate, would have subjected OPEC producers including Saudi to the same antitrust laws that US companies must follow.
Abdulaziz said that while he rated the chance of NOPEC becoming law at only five percent Saudi had to make contingencies.
"We have to re-look at our whole investment approach. NOPEC is equivalent to the Arab (oil) embargo inversely practiced by the US"
"How can we unload our [crude tanker] vessels in US jurisdiction if we're subject to this,"? the cable said he asked.
In May of 2008 the US House of Representatives voted to allow the Justice Department to sue OPEC members for limiting oil supplies and working together to set crude prices.
The White House under President George W Bush said it would veto the measure but it failed to get through a Senate vote.