GOH INTENDS TO MEET 100% FUEL DEMAND WITH

C O N F I D E N T I A L SECTION 01 OF 02 PORT AU PRINCE 001905

SIPDIS

SIPDIS

STATE FOR WHA/CAR
WHA/EPSC FOR FAITH CORNEILLE, ED MARTINEZ
EB/IFD
STATE PASS TO USAID FOR LAC/CAR
TREASURY FOR JEFFERY LEVINE
COMMERCE FOR SCOTT SMITH

E.O. 12958: DECL: 10/04/2016
TAGS: ENRG EPET ECON EAID HA
SUBJECT: GOH INTENDS TO MEET 100% FUEL DEMAND WITH
PETROCARIBE

REF: A. PAP 856


B. PAP 1377

C. PAP 1205

D. PAP 1483

PORT AU PR 00001905 001.2 OF 002


Classified By: Ambassador Janet A. Sanderson for reasons 1.4 (b) and (d
).


1. (C) Summary: President Rene Preval and finance minister
Daniel Dorsainvil informed the four oil companies operating
in Haiti of intentions to meet 100 percent of Haiti's
petroleum demand through its Petrocaribe agreement.
According to a Christian Porter, country manager for
ExxonMobil (operates as Esso in Haiti),the international oil
companies were shocked; they thought they would still have
the right to import their own oil, with Petrocaribe supplying
only part of Haiti's petroleum demand. Of the four
companies, only the domestic oil company, Dinasa, which has
been asked by President Rene Preval to manage and control
Petrocaribe stock, was not surprised by the government's
announcement. Dinasa employee Michel Guerrier thinks the
President's plan is a long shot at best. Post agrees with
Guerrier. Essentially, President Preval is asking the oil
companies to operate with petroleum purchased solely from
Petrocaribe via the GOH. End Summary.


2. (C) Porter told econoff that the President asked the four
companies for their position on Petrocaribe supplying 100
percent of Haiti's petroleum: Dinasa (a Haitian oil company)
and Total (French) representatives agreed with the
proposition, the Chevron (operates as Texaco) representative
said it is not his decision, and the ExxonMobil
representative said nothing. (Porter explained that Chevron
and ExxonMobil were not appropriately represented because
Preval called the meeting only the day before and they had
not been alerted to the broad scope of the proposal.)
According to Porter, Preval took this to be an unofficial
agreement between the GOH and the international oil
companies, and is now encouraging the oil companies to
communicate directly with Venezuela. Porter, speaking for
both ExxonMobil and Chevron, stressed that they would not be
willing to do this because they would lose their off-shore
margins and because of Petrocaribe's unreliable reputation.
Under existing arrangements, a tanker arrives every two weeks
and its contents are distributed to the four oil companies.
Porter noted that Preval did not explicitly prohibit the oil
companies from importing oil, at least not yet.


3. (C) Michel Guerrier, an employee of Dinasa told econoff
October 2 that the government may intend to import 100
percent of Haiti's petroleum through Petrocaribe but Guerrier
doubted that this plan would be realized. He said the GOH
does not have the means or capacity to manage 100 percent of
Haiti's petroleum supply, as seen by their experience with
the first 100,000 barrels of Petrocaribe fuel, and thus is
looking for help from the oil companies. (Note: The first
and only Petrocaribe shipment of 100,000 barrels of refined
fuels arrived May 14, but the GOH was unable to completely
unload it until mid-August (reftels A and B),and is still
having difficulty selling the petroleum to the two interested
buyers, Total and Dinasa, because the world market price for
oil has since dropped. Storage is at a premium in Haiti, and
transportation is difficult and expensive because of
poorly-maintained roads. Representatives of the two U.S. oil
companies told Ambassador early June that they do not make a
profit selling fuel in Haiti; their only profit is through
off-shore margins. End note.)


4. (C) Comment: The Petrocaribe agreement continues to
advance in theory. In practice, however, the agreement has
been stalled ever since the initial shipment arrived in May.
In discussions with the Ambassador early June, Edouard
Baussan (vice-president of Dinasa and Preval's point person
on Petrocaribe) agreed with the Ambassador that the GOH was
not capable of handling petroleum logistics like insurance,
transportation, storage and distribution. He also pointed
out that the government is wary of disturbing distribution
channels established by the four oil companies (reftel C).
It seems that Preval wants to have his cake and eat it too:

PORT AU PR 00001905 002.2 OF 002


he has asked that the oil companies participate in the
logistical and commercial process, whereby the GOH buys and
sells the petroleum (and benefits from the preferential terms
of the agreement, which GOH officials estimate will total
about USD 100 million per year (reftel D)) and then give
responsibility to the oil companies for the management of
storage and distribution of the product. This is a dubious
proposal that neither the U.S. oil companies in Haiti --
responsible for about 45 percent of Haiti's petroleum imports
-- nor Venezuela, for that matter, is likely to agree to.
The Ambassador plans to meet with ExxonMobil representatives
next week. Post will continue to follow Haiti's plan for
implementation of Petrocaribe and update as appropriate.
SANDERSON
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