TRANSFER OF MOBIL DJIBOUTI TO TOTAL COMMENCES

C O N F I D E N T I A L SECTION 01 OF 02 DJIBOUTI 000924

SIPDIS

STATE FOR AF/EPS ADA ADLER
STATE ALSO FOR AF, AF/E, AND EB
LONDON/PARIS FOR AFRICA WATCHER

E.O. 12958: DECL: 09/15/2015
TAGS: PREL PGOV ECON ETRD DJ
SUBJECT: TRANSFER OF MOBIL DJIBOUTI TO TOTAL COMMENCES

REF: RAGSDALE-ADLER E-MAILS (JULY 2005) NOTAL

Classified By: AMBASSADOR MARGUERITA D. RAGSDALE. REASONS 1.4 (B) AND
(D).


1. (C) ExxonMobil corporation has begun the process in
Djibouti of transferring shares in Mobil Djibouti to French
oil giant Total, following ExxonMobil's official announcement
September 5 in Brussels that it had sold to Total shares of
fuels and lubricants' affiliates in 14 African countries.
The 14 African countries are Chad, Djibouti, Ethiopia,
Eritrea, Ghana, Guinea, Liberia, Malawi, Mauritius,
Mozambique, Sierra Leone, TOGO, Zambia and Zimbabwe.


2. (C) Arnaud Blouin, a French national who is President and
Director General of ExxonMobil Tunisia, arrived in Djibouti
nearly two weeks ago to lead the transfer process. In a
meeting September 11 with Ambassador, Blouin, accompanied by
outgoing Mobil Djibouti President Alain Adam, described his
role as "caretaker" and "facilitator" until the transfer
process is complete, "hopefully before Christmas," he said.
Blouin will be based in Djibouti but will travel every three
weeks to Tunis. In the interim, Adam will move to Tunis to
act in Blouin's place. Adam's departure is set for
September 20. (Comment: Adam has faced personal difficulty
with Djiboutian authorities, who took steps in late July to
permanently bar him, while he was on vacation, from returning
to Djibouti. After interventions with the Djiboutian
government by the Ambassador and Mobil's regional director in
Nairobi, Adam was permitted to return for a minimum period.
See Ref A. At that time, the government of Djibouti was
unaware of the pending deal between ExxonMobil and Total.
End comment) Blouin reviewed details of the transfer with
Ambassador, which tracked ExxonMobil's official announcement.
When asked about the advantage to ExxonMobil of the
transaction, Blouin opined that it gave ExxonMobil an
opportunity to divest in a painless way some of its
not-so-profitable operations. In particular, in the case of
Mobil Djibouti, the transfer relieved ExxonMobil of the issue
of the disposition of its physical assets in country and
ongoing claims by the Djiboutian government regarding
pollution at Mobil Djibouti's fuel storage site in the
existing port facility.


3. (C) In a subsequent meeting (September 14) requested of
the Ambassador by Francois de Charnace, Director General of
Total Djibouti, Charnace told the Ambassador that Total
agreed to accept from ExxonMobil a "basket" of national
operations in the fuels/lubricants domain, some of which were
individually negotiated. Most are of equivalent size. He
said Total may have declined other possible domains --
perhaps larger -- because it already controlled a sizable
share of the market there. Total sees the purchase of shares
in the Horn of Africa as an advantage, according to Charnace,
because it permits an increase in market share for Total in
the region. In addition, given the long-term commitment of
France to Djibouti, both historically and practically, the
move made economic sense.


4. (C) Charnace also advised that acquiring Mobil will put
Total in a uniquely advantageous position politically in
Djibouti. He said the company is not interested in
re-locating to the new Doraleh port oil storage terminal,
despite the directive given all oil companies here last year
that made the move obligatory before January 1, 2006. Total
will be in a position, Charnace said, to put pressure on the
government to permit Total to keep its current depot in the
existing port. For starters, he said, Total will control all
of the fuel services for the U.S. and French military bases
and will likely become the primary supplier for the
Djiboutian military and Djiboutian government. This could
give it considerable leverage with the government of
Djibouti. Charnace did not see Shell, which may remain, as a
significant competitor.


5. (C) Charnace, Blouin and Adam had earlier briefed the
Minister of Presidential Affairs, Osman Ahmed Moussa, in the
wake of the announcement. Charnace said the first question
asked by Osman was whether Mobil was pulling out because of
the "situation" with Adam. Charnace said he believes the
Djiboutian government retains the view that Mobil pulled out
of Djibouti because of the government's treatment of Alain
Adam, despite Mobil's assurances to the contrary. Charnace
noted to Ambassador, however, that the blow-up over Adam had
been of particular interest to the business community in
France. Community members interpreted the government's
actions as one of retaliation against a businessman simply
because he tried to collect a legitimate debt owed by the
Djiboutian government. The call for Adam's ouster, coming on
the heels of a similar incident involving a French banker in
Djibouti, raised the question in the French community about
whether a business person could ever feel safe doing business
in Djibouti. "Not the right message to send," Charnace said.
Charnace said the government of Djibouti had been very keen
to ensure that in the transfer, there was no dismissal of
Mobil Djibouti employees so as to avoid the possibility of a
labor blow-up over loss of jobs. Both Mobil and Total
assured that the employee transition, including with pensions
and benefits, would be seamless.


6. (C) Neither Mobil or Total representatives would give a
value figure to this commercial transfer.
RAGSDALE