How to create a custom RHEL 7 image for use by Red Hat OpenStack from a VMware VMDK

Solution In Progress - Updated -

Issue

How to create a custom RHEL 7 image for use by Red Hat OpenStack from a VMware VMDK? A server was built in VMware to which cloud-init rpm was added. From that a VMware template was created. The VMDK was extracted from this template and then converted to qcow2. This procedure works flawlessly in RHEL 6, but the created RHEL 7 image does not boot in Openstack.

This image boots into grub, attempts to start RHEL and then times out, and reports the following error:

"Warning: Could not boot. (...) does not exist"

Environment

Red Hat Enterprise Linux 7.2

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