EXXON-MOBIL REPRESENTATIVE BRIEFS ON NEXT STEPS

UNCLAS SECTION 01 OF 02 DJIBOUTI 000731

SIPDIS

SENSITIVE

STATE FOR AF AND AF/E; STATE ALSO FOR AF/EPS;
LONDON AND PARIS FOR AFRICA WATCHERS

E.O. 12958: N/A
TAGS: EPET PREL PGOV ECON DJ
SUBJECT: EXXON-MOBIL REPRESENTATIVE BRIEFS ON NEXT STEPS
WITH DJIBOUTI

REF: A. A) ADDIS ABABA 1637


B. B) DJIBOUTI 711


1. This cable contains proprietary corporate information.
Please protect accordingly.


2. (SBU) Summary: Alain Adam, Director General of
Exxon-Mobil operations in Djibouti (Mobil),briefed
the Ambassador and DCM on May 23 about his meeting
with Exxon-Mobil's East and Southern Africa Cluster
Manager John DiTullio last week. Mobil
Djibouti's immediate plans are to ask
clarification from the Government of Djibouti
(GoDj) on the May 10 letters giving foreign oil
companies a year before shutting down terminal
operations at the old port; to approach
Abdurahman Boreh, 40 percent partner in the new port
of Doraleh, on the possibility of participating in the
oil terminal there; and to tally up present assets and
obligations to allow the company to do a cost-benefit
analysis of maintaining operations in Djibouti by
moving them to Doraleh. Adam remains concerned about
the lack of specifics on the new facilities, and
whether the GoDj will seriously address the problem
of compensation for lost physical assets and the
company's financial obligation to the more than 80
employees who will lose their jobs when the present
terminal stops operations. End Summary.


3. (SBU) Alain Adam, Director General of
Exxon-Mobil operations in Djibouti (Mobil),
was pleased with his meetings in
Addis Ababa last week with Exxon-Mobil's
East and Southern Africa Cluster
Manager John DiTullio and that there had
been a clear signal on how to proceed.
He mentioned that the GoDj was continuing its
negotiations with the Ethiopian government
on supplying petroleum products. Adam thought
these meetings were not proceeding smoothly,
and had been surprised when the Ethiopian
Petroleum company (EPE) extended its contract
with Mobil from December 31, 2004 through
June 2005.


4. (SBU) Adam seemed particularly pleased that he
had been authorized to deal directly with Abdurahman
Boreh, 40 percent shareholder in Doraleh ports,
on the possibility of moving operations there. He
hopes to see Boreh on May 28 or 29, if possible with
Shell General Manager Jean Pierre Wyns, and Total
representative Francois de Charnasse. (Note: Shell
and Mobil have firm plans to conclude a joint venture
to merge operations in Djibouti within the year. Total
has recently joined these negotiations and may bring
its operations into the joint venture, as well. End
Note.) Adam said he wanted to clear up any
misperception that Mobil was somehow opposed to
the Doraleh project.


5. (SBU) The May 10 letters from Boreh and the
Minister of Transport will require considerable
follow up. Initial plans are to write a letter to
the Minister of Transport to obtain maximum details
on the Doraleh port and the consequences of closure
of operations at the existing port. The letter will
be vetted through Exxon-Mobil legal offices in
Brussels in consultations with local attorney
Alain Martinet. In the interim, Mobil will evaluate
all its assets in Djibouti, including tanks, land,
and the cost of a severance package to existing
employees. Exxon-Mobil will not accept, he said,
any offset of its existing properties for clean-up
costs the Government of Djibouti may seek to levy.
"The court case against Mobil for pollution is a
different matter from being forced out of the
country," Adam said.


6. (SBU) Comment: Adam seems better focused on how to
proceed in resolving Mobil's principal problem with
the Government of Djibouti. Unclear, specifically, are
costs and conditions for using the Emirate National
Oil Company (ENOC) facilities in Doraleh, and whether
ENOC has obtained a contract for refueling U.S.
naval vessels. However, Adam now has a game plan.
In the meantime, we will continue to consult with Mobil
on this and other issues. These include Government of
Djibouti charges of Mobil polluting the harbor, and
Mobil's difficulties with corrupt judges. End comment.
RAGSDALE