U.S. OIL INDUSTRY RESPONSE TO GOH PETROCARIBE

UNCLAS SECTION 01 OF 02 PORT AU PRINCE 001960

SIPDIS

SENSITIVE
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: N/A
TAGS: ENRG EPET ECON EAID HA
SUBJECT: U.S. OIL INDUSTRY RESPONSE TO GOH PETROCARIBE
PROPOSAL

REF: PAP 1905

PORT AU PR 00001960 001.2 OF 002


(SBU) 1. Summary: Post met with representatives of the two
U.S. oil companies operating in Haiti, ExxonMobil (operates
as Esso) and Chevron (operates as Texaco),following
President Rene Preval's September 27 announcement of GOH
intentions to import 100 percent of Haiti's fuel demand from
Petrocaribe (reftel). Though representatives of both
companies were shocked by the announcement, ExxonMobil
representatives expressed strong reservations, whereas Texaco
representatives had a more passive response, stating that
they would go along with it if the playing field was level
for all of the oil companies in Haiti. Neither company has
informed the government of their concerns with the proposal
to supply all of Haiti's fuel through Petrocaribe. Post
encouraged the two companies to do so. Despite the
Ambassador's numerous attempts to discuss (and discourage)
GOH intentions to move forward with the Petrocaribe
agreement, the GOH insists the agreement, implemented in
full, will result in a net gain for Haiti. GOH officials
recognize their limited capacity -- to manage, import,
supply, transport and distribute -- all of Haiti's fuel, but
hope to implement the preferential payment plan while leaving
the logistics to the private companies. End Summary.

(SBU) 2. Both companies were shocked by the government's
intentions to import 100 percent of Haiti's fuel from
Petrocaribe. ExxonMobil representatives speculated that
perhaps Venezuela said that it could meet 100 percent of
Haiti's fuel demand and that the GOH is simply exploring
whether or not it could manage and control that much
petroleum (about 11,000 barrels per day),despite its limited
capacity. ExxonMobil and Chevron reps said that the GOH
knows nothing about the supply side of petroleum, and that
clearly a lack of information on the government's part
motivated their most recent declaration. They argue that if
the GOH understood what it took to supply petroleum to Haiti,
it would know better than to disrupt the process and that if
the GOH had any technical expertise it would not need to ask
for the participation of the oil companies. Both companies
also noted that President Preval does not want to discuss the
details of the agreement and has remained ambiguous about his
intentions.

(SBU) 3. Chevron and ExxonMobil representatives have not
openly expressed their reservations to the government.
Following Preval's September 27 meeting with all four oil
companies (ExxonMobil, Chevron, Total, and Dinasa),the oil
industry association (Association des Professionals du
Petrole -- APP) received an invitation to meet with
representatives of the Venezuelan oil company who were in
Haiti. All four companies refused to attend. Also, the
companies received letters separately requesting information
on importation and distribution from the GOH on October 9.
So far, no one has responded.

(SBU) 4. The representatives also noted (in separate
meetings) that a Cuban transport company, Transalba, will
ship the petroleum from Venezuela to Haiti, and that as U.S.
companies, they would not be allowed to work directly with
the Cuban vessel. Also, they said that the first and only
shipment of Petrocaribe fuel, which arrived May 14, would
never have passed their inspections -- because of the type of
ship and because it was uninsured. ExxonMobil also gave
examples of the difficulties it would have with working with
Petrocaribe due to Exxon's high standard of quality and
necessary product inspections. (Note: ExxonMobil and Chevron
are responsible for 45 percent of total fuel demand in Haiti,
12 percent and 33 percent respectively. Chevron is the sole
supplier of the airline industry (they have a station right
next to the airport),which accounts for about three percent
of total demand. End note.)

(SBU) 5. Comment: Ambassador has discussed Petrocaribe with
a number of GOH officials, including President Preval and his
two closest advisors, Bob Manuel and Gabriel Verret. Though
they usually agree with the Ambassador's numerous and valid
points (from specific logistical complications to the larger

PORT AU PR 00001960 002.2 OF 002


negative message that this would send to the international
community at a time when the GOH is trying to increase
foreign investment),they argue that the economic benefits to
Haiti are too good to miss. In fact, the President
attributes the Ambassador's concern to the political impasse
between the U.S. and Venezuela. It is clear that President
Preval and his inner circle are seduced by the payment plan
for Petrocaribe fuel (by which the government pays for 60
percent over a 90 day period and 40 percent over a period of
25 years at a one to two percent interest rate). The Embassy
will continue to discuss Petrocaribe with GOH official and
the industry representatives.
SANDERSON

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