IN GAS CEREMONY CHAVEZ SOUNDS A LESS AGGRESSIVE

C O N F I D E N T I A L CARACAS 000851

SIPDIS


NSC FOR TSHANNON AND CBARTON
ENERGY FOR DPHUMPHREY AND ALOCKWOOD

E.O. 12958: DECL: 03/09/2014
TAGS: EPET PREL ECON VE
SUBJECT: IN GAS CEREMONY CHAVEZ SOUNDS A LESS AGGRESSIVE
NOTE TOWARDS U.S.

REF: CARACAS 708

Classified By: AMB. CHARLES S. SHAPIRO, FOR REASONS 1.4 (b) and (d)

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SUMMARY
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1. (C) President Chavez pointedly lowered his anti-U.S.
rhetoric in a March 9 ceremony hurriedly organized by the GOV
to recognize the award to ChevronTexaco (CTX) of an
exploration license for an off-shore natural gas block.
While agreeing that Chavez had sought to send a message to
the USG, senior CTX executives felt it likely that the larger
message was aimed at calming the markets, and particularly
would-be investors. We believe Chavez is seeking to adopt a
strategy from his mentor Fidel Castro and will attempt to use
the petroleum industry to try to influence U.S. policy
towards Venezuela. End Summary.

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CHEVRONTEXACO EVENT PROVIDES A VEHICLE
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2. (SBU) As reported reftel, on February 19 the GOV announced
the award of Block 3 of the off-shore Deltana Platform
natural gas project to ChevronTexaco (CTX),the sole bidder
on the block. CTX Latin America President Ali Moshiri
contacted the Ambassador late on March 5 with the news that
the GOV had contacted him to say the license would be granted
in a ceremony at Miraflores Palace on March 8. Econoff
ultimately attended the ceremony representing the Ambassador.

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ATMOSPHERICS
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3. (C) While it is normal for the Minister of Energy and
Mines and PDVSA President Ali Rodriguez to attend such
events, a panoply of other senior GOV officals attended.
Virtually the entire economic cabinet was there (Ministers of
Finance, Production and Commerce, and Planning and
Development) as well as Foreign Minister Jesus Perez and Vice
President Jose Vicente Rangel. Ali Rodriguez was accompanied
by numerous senior PDVSA officials (including CITGO President
Luis Marin who reportedly had met with President Chavez upon
his arrival in Venezuela the day before). (Note: So many,
in fact, that econoff believed Chavez would make a
long-expected announcement about changes in PDVSA's Board in
his speech.)

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THE SPEECH
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4. (C) Chavez spoke for about an hour in a speech broadcast
by GOV mandate nationally on all radio and television
channels. In an early reference to CTX, he said pointedly
"we recognize ..the presence of these brothers from the U.S.
who come not to attack us nor to show a lack of respect, but
come to unite with us..." Leading with,"our relationship
with the U.S. is historic and profound," Chavez then launched
into a lengthy discourse on the role of Venezuelan
independence leader Francisco de Miranda in the U.S. War of
Independence. He also spoke of Presidents Roosevelt and
Kennedy, the Marshall Plan and Alliance for Progress, and
noted that Roosevelt, had be lived now, would have been
accused of being a "chavista." Chavez also comparied
President Kennedy and Senator John Kerry. He underlined that
Venezuela has been a stable supplier of oil to the U.S.
during the five years of his presidency, except for two
occasions in April and December 2002 when supply disruptions
had been caused by his opposition. Chavez pointed to the
overall importance of the U.S. as a commercial partner to
Venezuela and finally ended with a reference to Walt
Whitman's "Leaves of Grass."


5. (C) In his one off-message moment, Chavez slipped in a
reference to the capital of Trinidad and Tobago as Port of
Prince. After an aide handed him a note, he apologized to
the Trinidadian Ambassador who was present in the audience


and corrected himself, saying he had been thinking about Port
of Prince a great deal recently and that "part of his soul"
was there.

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CTX'S TAKE
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6. (C) In a subsequent meeting with the Ambassador, Ali
Moshiri, accompanied by Alan Kleiman, Vice President for
Exploration and Production of ChevronTexaco International,
agreed that the ceremony had been arranged with suspicious
speed. He added that the award of an exploration block
hardly merits such treatment -- and particularly a block for
which CTX had only made a $5 million bonus bid. The CTX
executives laughed over the impression Chavez had created in
his speech that CTX had won the block in competition against
15 other bidders rather than being the sole bidder. They
agreed the GOV had staged the event to provide a
counterbalance to Chavez's harsh comments about cutting off
oil sales to the U.S. the week before. But, while agreeing
that Chavez sought to send a message to the USG, Moshiri felt
it likely that the larger message was aimed at calming the
markets, and particularly would-be investors. Moshiri added
that, if there had been another non-U.S. bidder, the GOV
would have found some way to award the block to that bidder
and reiterated his belief (reported reftel) that Minister of
Energy and Mines Ramirez_ and PDVSA President Ali Rodriguez
had worked hard to convince Chavez to award the block to a
U.S. company.

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COMMENT
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7. (C) It is clear that Chavez had deliberatedly sought a
venue in which he could pitch a different message to U.S.
majors after his threats to cut off oil supplies the week
before which were coupled with vulgar abuse of President
Bush. We believe Chavez is seeking to adopt a strategy from
his mentor Fidel Castro. Just as Fidel has tried to use
potential food sales to Cuba to turn U.S. agribusinesses into
lobbyists for him, we believe Chavez may attempt to use
energy companies to shield him from U.S. political criticism.
Ultimately, Chavez believes that oil is all that matters to
the U.S. in Venezuela and that, so long as the oil flows
uninterrupted, we should leave him alone.


8. (C) We expect Chavez quickly to resume his U.S. bashing.
SHAPIRO


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2004CARACA00851 - CONFIDENTIAL