C O N F I D E N T I A L PANAMA 002137

SIPDIS


FOR WHA/EPSC EDUARDO J. MARTINEZ


E.O. 12958: DECL: 08/20/2014
TAGS: ECON ENRG XK PM CARIB ECONOMIC AFFAIRS
SUBJECT: PANAMA'S RELIANCE ON VENEZUALAN OIL


REF: STATE 176535


Classified By: ECON Chief Andrew Bowen for reasons 1.5 (b) and (d).



1. (U) Per instructions, paras 2 and 3 contain answers to
reftel.


2. (U) While Panama imports over half of its oil from
Venezuela, it does not do so under the terms of either the
San Jose or Caracas Accords. Panama is a signatory to both
Accords; however, it did not/not renew the Caracas Accords
after the initial year. Panama purchased oil using the San
Jose Accords in the 1980s (until 1989) because, at that time,
the GOP controlled the oil industry in Panama. Panama's last
refinery closed at the end of 2002 and today the country only
imports refined oil. In 2003, Panama imported 7,654,366.78
barrels. Fifty-one percent was imported from Venezuela, 27
percent from the United States, 5 percent from Trinidad, and
17 percent from other countries.


3. (C) Panama does not consider Venezuela to be a stable
supplier of petroleum because delivery dates and schedules
are not met consistently. In the past, Panama received its
oil directly from refineries in Venezuela. However, these
refineries began to have production problems and could not
accommodate demand. Consequently, Panama receives its oil
from Venezuela after it has been refined in Aruba. Venezuela
maintains that this is the only refinery available to meet
Panama's demand. The GOP has not/not received any formal
proposal from the Government of Venezuela regarding
PetroAmerica. (Comment. From post's conversations with GOP
hydrocarbon experts, it does not seem likely Panama would be
interested in this initiative. End comment.)
MCMULLEN