WikiLeaks – Update On PetroCaribe 2



Reference id 06CARACAS1712 aka Wikileaks id #67671 ?
SubjectUpdate On Petrocaribe

Image via Wikipedia


Origin Embassy Caracas (Venezuela)
Cable time Mon, 12 Jun 2006 15:48 UTC
Classification CONFIDENTIAL
Source http://wikileaks.org/cable/2006/06/06CARACAS1712.html
References 05CARACAS3560, 05CARACAS3594, 06CARACAS1238, 06PARAMARIBO343
Referenced by 06CARACAS1849, 06CARACAS2297, 06CARACAS2406, 07PORTOFSPAIN456
Release time Thu, 1 Sep 2011 23:24 UTC -->
History

  • Time unknown: Original unredacted version, leaked to Wikileaks
  • Thu, 1 Sep 2011 23:24: Original unredacted version published, with HTML goodies


VZCZCXRO5939
RR RUEHDE
DE RUEHCV #1712/01 1631548
ZNY CCCCC ZZH
R 121548Z JUN 06
FM AMEMBASSY CARACAS
TO RUEHC/SECSTATE WASHDC 4974
INFO RUCNARA/ARA COLLECTIVE
RUEHHH/OPEC COLLECTIVE
RUEHBE/AMEMBASSY BELIZE 0077
RUEHBO/AMEMBASSY BOGOTA 6628
RUEHBR/AMEMBASSY BRASILIA 5549
RUEHWN/AMEMBASSY BRIDGETOWN 0712
RUEHBU/AMEMBASSY BUENOS AIRES 1282
RUEHGE/AMEMBASSY GEORGETOWN 0183
RUEHKG/AMEMBASSY KINGSTON 0380
RUEHLP/AMEMBASSY LA PAZ 2090
RUEHPE/AMEMBASSY LIMA 0335
RUEHBH/AMEMBASSY NASSAU 0103
RUEHPO/AMEMBASSY PARAMARIBO 0704
RUEHPU/AMEMBASSY PORT AU PRINCE 0156
RUEHSP/AMEMBASSY PORT OF SPAIN 3186
RUEHQT/AMEMBASSY QUITO 2174
RUEHSG/AMEMBASSY SANTIAGO 3585
RUEHDG/AMEMBASSY SANTO DOMINGO 0243
RUEHUB/USINT HAVANA 0781
RHEHAAA/WHITEHOUSE WASHDC
RHEBAAA/DEPT OF ENERGY
RUCNDT/USMISSION USUN NEW YORK 0280
RUCPDOC/DEPT OF COMMERCE
RUEATRS/DEPT OF TREASURY
RHEHNSC/NSC WASHDC


C O N F I D E N T I A L SECTION 01 OF 03 CARACAS 001712
SIPDIS
SIPDIS
ENERGY FOR CDAY, DPUMPHREY, AND ALOCKWOOD
NSC FOR DTOMLINSON
E.O. 12958: DECL: 11/25/2015
TAGS: EPET?[Petroleum and Natural Gas], ENRG?[Energy and Power], EINV?[Foreign Investments], VE?[Venezuela] SUBJECT: UPDATE ON PETROCARIBE
REF:
A. 2005 CARACAS 03560
B. 2005 CARACAS 03594
C. PAP 856
D. 2005 BELIZE 00952
E. PAP 971
F. CARACAS 1238
G. PARAMARIBO 00343
Classified By: Economic Counselor Andrew N. Bowen for Reason 1.4 (D)
¶1. (C) SUMMARY: During the past seven months, the BRV
appears to have focused on building institutions such as
joint venture companies to support the Petrocaribe initiative
(Reftel A). Shipments of oil still appear to be relatively
few in number. Although the lines between various BRV
initiatives such as Petrocaribe and Petroamerica have always
been blurred (Reftel B), the BRV has clearly been linking
Petrocaribe to its Bolivarian Alternative for the Americas
(ALBA), a trade agreement/Latin American integration project
that was created on December 14, 2004 in opposition to the
FTAA. END SUMMARY


---------------------------------
BUILDING PETROCARIBE INSTITUTIONS
---------------------------------
¶2. (C) Petrocaribe is composed of 14 countries (including
Venezuela) that signed the Petrocaribe Energy Cooperation
Agreement on June 29, 2005 as well as Haiti, which signed the
agreement on May 14, 2006 (Reftel C). Signatories to the
agreement are provided generous financing terms when they
purchase oil and petroleum products from Venezuela and have
the option of making partial payment in goods and services
(Reftel A). State entities importing oil under Petrocaribe
have a two year grace period and a 17 year timetable for
repayment at a two percent interest rate when the price of
oil is below USD 40 per barrel. When the price of oil is
above USD 40 the payment period is 25 years and the interest
rate drops to one percent. The initiative also contains a
social development component. As part of the initiative, the
BRV has created the AlbaCaribe Fund. The fund, with initial
capital of 50 million USD provided by Venezuela, will finance
social and economic programs in Petrocaribe countries. The
fund's capital will be augmented by the issuance of financial
instruments, contributions based on a percentage of petroleum
sale financing under Petrocaribe, and "savings produced by
direct hydrocarbon commerce". Details on the actual state of
the fund are not available and we cannot confirm that any
disbursements have been made. (COMMENT: The BRV is
notoriously slow and incompetent at delivering results
through similar programs in Venezuela. END COMMENT)

¶3. (U) Under Petrocaribe, Venezuela will only deal directly
with state entities, rather than the private sector. In
order to carry out its commitments under Petrocaribe, PDVSA,
the Venezuelan state oil company, has created an affiliate,
PDV Caribe. PDVSA Vice President for Refining Alejandro
Granado serves as PDV Caribe president. PDV Caribe is
charged with creating a shipping network as well as
increasing members' storage, refining, and distribution
capacities. PDVSA claims it has sufficient shipping capacity
to meet its Petrocaribe obligations and that Petrocaribe
members will only be charged the actual costs of shipping.

CARACAS 00001712 002 OF 003

¶4. (U) PDV Caribe has recently begun forming joint venture
companies with member states. PDV Caribe and Belize
Petroleum and Energy Limited, the state oil company of
Belize, signed an agreement on June 9, 2006 to form a joint
venture called ALBA PetroCaribe (Belize Energy) Ltd. which
will handle fuel shipment to Belize. PDV Caribe will have a
55 percent equity stake in the company with Belize Petroleum
holding the remainder. The joint venture will handle
shipments of crude oil, refined products, and liquefied
petroleum gas at the equivalent level of 4,000 barrels of oil
per day. PDV Caribe also indicated that it would assist
Belize with the construction of a 50,000 barrel storage
facility and improved port facilities. Granado was quoted on
the PDVSA website as stating PDVSA is considering the
possibility of processing crude oil in Belize. Granado noted
Belize produces 2,500 barrels of crude oil per day, which
covers 85 percent of its needs, but does not have any
processing facilities.

¶5. (U) PDV Caribe officials met with officials of St. Kitts
and Nevis on June 8, 2006 to discuss the formation of a joint
venture between the two countries. The parties will meet
again on June 27. PDVSA is also in negotiations with
Dominica to form a joint venture.

¶6. (U) Granado and a team of PDV Caribe officials also met
with officials from Antigua and Barbuda on June 8 to discuss
the formation of a joint venture. Granado said Antigua and
Barbuda is being considered as a storage and distribution
point for the Petrocaribe system. The proposal will be
discussed at an energy minister's meeting to be held on June
14 in Dominica. Energy ministers from Dominica, Antigua and
Barbuda, Grenada, St. Kitts and Nevis, and St. Vincent and
the Grenadines are scheduled to attend.

¶7. (U) Finally, Venezuela has created several entities with
Cuba in order to further Petrocaribe. PDVSA-Cuba, PDVSA's
office in Cuba, has been charged with furthering energy
cooperation between the two countries. In addition, a joint
venture, PDSVA-Cupet, has been formed to upgrade the
Cienfuegos refinery (Reftel A). PDVSA-Cupet is a joint
venture between PDVSA Cuba and Commercial Cupet, an affiliate
of Union Cubana de Petroleo. PDVSA-Cupet's goal is to
produce 15,000 barrels of gasoline, 14,000 barrels of diesel,
7,000 barrels of jet fuel, 33,000 barrels of fuel oil and
1,000 barrels of liquefied petroleum gas per day. On April
30, 2006 the director general of PDVSA Cuba and
representatives of the Cuban firm Internacional Maritima S.A.
signed an agreement forming TransALBA, a shipping company
that is charged with integrating shipping within Petrocaribe.
TransALBA will initially be based in Havana but there are
plans to open branches in various Caribbean countries. Cuba
and Venezuela have also formed a company called Ferrolaza
that will develop railway infrastructure throughout Latin
America. Finally, President Chavez stated in a press
conference at the signing of the ALBA accords, whose
centerpiece was an FTA between Cuba, Venezuela, and Bolivia,
on April 29, 2006 in Havana, that Venezuela and Cuba would
create a supertanker base at the Matanzas terminal in Cuba
and would jointly operate the base.

---------------------
PETROCARIBE SHIPMENTS

CARACAS 00001712 003 OF 003

 

---------------------
¶8. (U) It is our understanding that Venezuela has made
shipments under Petrocaribe to Belize (Reftel D), Haiti
(Reftel E), and Dominica as well as regular shipments to
Cuba. Venezuela sent a shipment of 60,000 barrels of diesel
and 40,000 barrels of gasoline to Haiti under the standard
Petrocaribe financing terms (Reftel A). Part of the diesel
shipment, however, was a donation. In addition, Venezuela
will donate 120 tons of asphalt to Haiti each month for
twelve months. On June 7, 2006 Dominica received its first
shipment of 1,200 barrels of asphalt under Petrocaribe.
Dominica is scheduled to receive asphalt shipments on a
quarterly basis.

¶9. (C) COMMENT: We are not aware of any additional
shipments under the terms of Petrocaribe but we assume that
at least some shipments are occurring. Venezuela was
shipping oil to various members of Petrocaribe under the
terms of the San Jose and Caracas accords. For example, the
Dominican Republic was receiving 50,000 barrels of oil per
day under the two agreements and is supposed to be receiving
54,000 barrels per day under Petrocaribe. Obviously,
Venezuela has committed to ship oil to all of the Petrocaribe
members on a regular basis. For example, Jamaica has a
supply agreement with Venezuela for 21,000 barrels a day of
oil and products. What is not clear to us is whether the
shipments are occurring in a timely manner. Given PDVSA's
long list of administrative and managerial problems (Reftel
F), it would not surprise us if it was having great
difficulty in meeting its obligations. As we noted in Reftel
A, shipping has not been one of PDVSA's strong points.
END COMMENT

-------
COMMENT
-------

¶10. (C) A cursory review of PDVSA press releases and
President Chavez's speeches clearly show that the BRV regards
Petrocaribe as a key component in ALBA, its grandiose trade
agreement/integration scheme for Latin America and Caribbean.
It is no accident that Petrocaribe joint ventures contain
ALBA in their names. Although Petrocaribe is the most
developed part of the Petroamerica continental energy
initiative, the question, as always with BRV schemes, is
whether the BRV has the human capital, persistence, and
wherewithal to actually execute its plans. The BRV is
infamous for announcing sweeping, dramatic new initiatives
which never go anywhere. It is hard to imagine how PDVSA
will be able to properly staff the plethora of Petrocaribe
joint ventures when it has serious staffing problems and
declining oil production at home. In addition to human
capital constraints, the BRV is increasingly relying on PDVSA
to both fund and carry out a long list of social development
projects, at home and abroad. These limitations are further
exacerbated by PDVSA and the BRV's use of hardball tactics
whenever they do not get their way (Reftel G). Given its
current muddled operating state and competing interests for
its time and money, it is hard to see PDVSA devoting the type
of resources to Petrocaribe to fully meet its burgeoning
obligations in a professional manner.
WHITAKER

[Original]

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