CHAVEZ CHARMING THE OIL SECTOR

C O N F I D E N T I A L CARACAS 002564

SIPDIS


NSC FOR TSHANNON AND CBARTON
ENERGY FOR DPUMPHREY AND ALOCKWOOD

E.O. 12958: DECL: 08/08/2014
TAGS: ENRG PGOV VE
SUBJECT: CHAVEZ CHARMING THE OIL SECTOR


Classified By: Economic Counselor Richard Sanders; for reasons 1.4 (b)
and (d)

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SUMMARY
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1. (C) An August 6 ceremony to mark the opening of drilling
by ChevronTexaco in the off-shore Deltana Platform natural
gas project provided President Chavez with an opportunity to
posture for the nation and to send a message to the United
States. Chavez publicly tasked Ali Moshiri, ChevronTexaco
Vice President for Latin America Upstream, to take the
message to the people and government of the U.S. that
"although they do not understand us well, we are your
friends." The ceremony, broadcast by presidential order on
all/all television and radio stations, capped a round of
meetings between Chavez and the business sector, including
the oil sector. Chavez also announced that the GOV would
soon open a bid round on additional off-shore exploration
blocks. While ExxonMobil has resisted pressure to sign a
project document in a similar public ceremony (see septel),
the GOV has succeeded in using the energy sector to create a
sense of momentum in the run up to August 15. However,
Chavez's message of friendship for the U.S. subsequently
slipped when, in front of a gathering of the faithful, he
once again returned to the theme of cutting off oil sales to
the U.S. in the face of supposed U.S. aggression. End
Summary.

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THE CEREMONY
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2. (U) On August 6, econoff attended a ceremony at Miraflores
Palace marking the launch of the first exploratory well in
the off-shore Deltana Platform natural gas project (see
septel for details about the project). The ceremony, carried
by presidential mandate on all/all of the country's radio and
television stations, featured Chavez talking by satellite
hookup to Vice Minister of Hydrocarbons Luis Vierma and
Venezuelan members of the drilling crew on the drill
platform. In their remarks both Chavez and Vice Minister
Vierma emphasized that the administration is not "giving
away" Venezuela's natural resources (a charge this government
has frequently lodged against the governments of the 1990's
that sponsored projects mounted by international oil
companies) and underlined the employment benefits that will
flow from the new gas project as well as other social
development projects underway in Sucre and Delta Amacuro
states.


3. (U) In addition to hailing the launch of drilling in Block
2 of the Deltana Platform, Chavez formally awarded the
exploration license for Block 3 to ChevronTexaco. He also
announced that the GOV would soon open a bid round on 10
off-shore exploration blocks off Falcon state and in the Gulf
of Venezuela.

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THE MESSAGE
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4. (U) At the end of the ceremony, President Chavez directed
ChevronTexaco Vice President Ali Moshiri to take the message
to the people and government of the U.S. that "although they
do not understand us well, we are your friends." Continuing
with his remarks Chavez said, "Because there are elections in
November, if President Bush is re-elected, we hope that those
who advise him will reflect, because we don't understand why
a country like this, a strategic ally and partner, has been
subjected to the pressure, and to much more than pressure,
that we have received from Washington, putting the stability
of the country in danger." If Kerry is elected, said Chavez,
he looked forward to "starting ... frank, sincere,
cooperative relations between the two governments...."


5. (U) Chavez contrasted how things might be, noting that,
"if we can do this business...despite the terrible weight of
the permanent problems in the relationship between the two
governments ) not because we want it, we have done nothing
to damage the relationship. The offenses...have come from

there, because I think they are not well informed about what
it happening here." Chavez ended by saying that he offered
his remarks "with respect but with frankness," and repeating
a line he frequently uses, "we are the brothers of the people
of Walt Whitman, Abraham Lincoln...."

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OUTREACH TO BUSINESS
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6. (U) The ceremony capped a round of weekly meetings between
Chavez and the business sector that have been held in
Maracaibo, Valencia, Caracas, and Puerto La Cruz. Although
other sectors have been included, the energy sector has
figured prominently in these events with figures such as
Moshiri, Shell President Jaoquin Moreno, and Venezuela
Petroleum Association President Grisanti addressing President
Chavez about the needs of the sector.

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SOME COMPANIES TAKING A DIFFERENT TACK
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7. (SBU) It was interesting to note that there were no
representatives of ConocoPhillips, ChevronTexaco's partner in
Block 2, at the ceremony. ChevronTexaco employees told
econoff that ConocoPhillips had declined to participate in
the ceremony, saying they wanted to keep a low profile.
ExxonMobil (see septel) has also resisted GOV pressure to
sign a project document for a major petrochemical investment
in the same type of public ceremony.

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COMMENT
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8. (C) With this ceremony and the series of business sector
fora, the GOV has deftly succeeded in using the energy sector
particularly to create a sense of momentum in the economy in
the run up to August 15. Despite the fact that large scale
energy projects create little employment for the uneducated
workers who are most likely to be Chavez supporters, these
ceremonies create expections and, Chavez hopes, votes.
However, Chavez's message of friendship for the U.S.
subsequently slipped when, in front of a gathering of the
faithful, he once again returned to the theme of cutting off
oil sales to the U.S. in the face of supposed U.S. aggression.
Shapiro


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2004CARACA02564 - CONFIDENTIAL