Identifier
Created
Classification
Origin
07BUENOSAIRES311
2007-02-16 16:28:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Buenos Aires
Cable title:
PRESIDENT KIRCHNER'S FEB 21 VISIT TO VENEZUELA: ECONOMIC
how-toVZCZCXYZ0000 RR RUEHWEB DE RUEHBU #0311/01 0471628 ZNR UUUUU ZZH R 161628Z FEB 07 FM AMEMBASSY BUENOS AIRES TO RUEHC/SECSTATE WASHDC 7312 INFO RUEATRS/DEPT OF TREASURY WASHINGTON DC RUCPDOC/USDOC WASHINGTON DC RUEHC/DEPT OF LABOR WASHINGTON DC RHMFIUU/HQ USSOUTHCOM MIAMI FL RUEHAC/AMEMBASSY ASUNCION 5948 RUEHMN/AMEMBASSY MONTEVIDEO 6185 RUEHSG/AMEMBASSY SANTIAGO 0191 RUEHBR/AMEMBASSY BRASILIA 5795 RUEHSG/AMEMBASSY SANTIAGO 0192 RUEHLP/AMEMBASSY LA PAZ FEB SAO PAULO 3167 RUEHRI/AMCONSUL RIO DE JANEIRO 2153
UNCLAS BUENOS AIRES 000311
SIPDIS
SIPDIS
SENSITIVE
EB/CBA FOR FMERMOUND, DENNIS WINSTEAD
EB/IFD/OIA FOR WSCHOLZ, MTRACTON
WHA FOR WHA/BSC AND WHA/EPSC
E FOR THOMAS PIERCE
PASS NSC FOR JOSE CARDENAS
PASS FED BOARD OF GOVERNORS FOR PATRICE ROBITAILLE
PASS USTR FOR EEISSENSTAT, SCRONIN
TREASURY FOR AFAIBISHENKO, NLEE
USDOC FOR 4322/ITA/MAC/OLAC/PEACHER
US SOUTHCOM FOR POLAD
E.O. 12958: N/A
TAGS: EINV ECON ENRG EPET AR
SUBJECT: PRESIDENT KIRCHNER'S FEB 21 VISIT TO VENEZUELA: ECONOMIC
COOPERATION ON DISPLAY
Ref: (a) Buenos Aires 55
(b) 06 Buenos Aires 2240
-------
Summary
-------
UNCLAS BUENOS AIRES 000311
SIPDIS
SIPDIS
SENSITIVE
EB/CBA FOR FMERMOUND, DENNIS WINSTEAD
EB/IFD/OIA FOR WSCHOLZ, MTRACTON
WHA FOR WHA/BSC AND WHA/EPSC
E FOR THOMAS PIERCE
PASS NSC FOR JOSE CARDENAS
PASS FED BOARD OF GOVERNORS FOR PATRICE ROBITAILLE
PASS USTR FOR EEISSENSTAT, SCRONIN
TREASURY FOR AFAIBISHENKO, NLEE
USDOC FOR 4322/ITA/MAC/OLAC/PEACHER
US SOUTHCOM FOR POLAD
E.O. 12958: N/A
TAGS: EINV ECON ENRG EPET AR
SUBJECT: PRESIDENT KIRCHNER'S FEB 21 VISIT TO VENEZUELA: ECONOMIC
COOPERATION ON DISPLAY
Ref: (a) Buenos Aires 55
(b) 06 Buenos Aires 2240
--------------
Summary
--------------
1. (SBU) President Kirchner travels February 21 to Puerto Ordaz,
Venezuela with an agenda that is principally economic: He will seek
to confirm GoV assistance in placing up to $2 billion in new
Argentine sovereign debt; finalize $135 million GoV rescue funding
for SanCor, an emblematic Argentine dairy cooperative; and discuss
expanded cooperation between GoA national oil company ENARSA and the
GoV's PDVSA in a possible joint exploration and development activity
in Venezuela's Orinoco region. Other likely topics of conversation
will include the proposed $20-billion-plus Venezuela to Argentine
natural gas pipeline (discounted by energy experts here as not
economically viable) and a $240 million contract for an Argentine
shipyard to build four petroleum product tankers for PDVSA using
Venezuelan steel. Our GoA contacts continue to emphasize that
Argentina's relationship with Caracas remains pragmatic and
principally driven by economic considerations, and that they share
neither Chavez's social ideology nor his Bolivarian ambitions. END
SUMMARY
--------------
Argentina Seeks Additional GoV Bond Support
--------------
2. (U) President Kirchner's planned February 21 visit is currently
being advanced by Planning Minister De Vido and Santa Fe province
Governor Obeid (where SanCor is based). The final Kirchner
delegation will include Minister De Vido, Economy Minister Miceli,
her Finance Secretary Chodos and her Legal Secretary Palomenque.
3. (SBU) Embassy Economy Ministry contacts report that ongoing
GoA/GoV discussions may lead to the announcement during Kirchner's
visit of the GoV's purchase of a new "Boden" bond issue and/or a
second joint bond issue (the "Bono del Sur II" - Ref B). Local
media is speculating that the GoV may purchase up to $2 billion in
GoA bonds, roughly one-third of GoA's planned financing of about
$6-7 billion for 2007. A new joint bond could be similar to the
initial Bono del Sur issued in November 2006, a package of (1) a
Venezuelan bond denominated in Bolivars, and (2) a
dollar-denominated Argentina bond. There were no cross default
clauses in the original Bono del Sur issue; international financial
markets called the exercise largely cosmetic and quickly stripped
out its component bonds for independent trading.
--------------
SanCor Dairy Cooperative Rescue
--------------
4. (SBU) Planning Minister De Vido and Santa Fe Governor Obeid are
now in Caracas wrapping up an agreement whereby the GoV's
state-owned Banco Nacional de Desarrollo Economico y Social de
Venezuela (BANDES) will provide a $135 million assistance package to
Argentina's second largest dairy cooperative, SanCor, in exchange
for long term payments in the form of powdered milk and technology
transfer. Our Planning Ministry contacts report some GoA annoyance
at repeated GoV delays in finalizing this SanCor assistance package;
this delay has also been widely reported in the local media. The
financially troubled diary cooperative was to have been sold to a
Soros-linked investment fund before this GoV "rescue offer" was
accepted by SanCor in the fall of 2006.
--------------
Joint ENARSA and PDVSA Exploration
--------------
5. (SBU) Planning Ministry contacts report that Kirchner and Chavez
will also sign an agreement to have GoA national oil company ENARSA
(formed in 2004) participate with the GoV-owned Petroleos de
Venezuela (PdVSA) in an Ayacucho upstream exploration block in
Venezuela's Orinoco region. Independent energy analysts in Buenos
Aires note GoA efforts to encourage Argentine private sector
participation in this exploration initiative, with the Techint
Group's Pluspetrol and Tecpetrol being courted as potential joint
venture partners. These analysts see any GoA/GoV petroleum
exploration agreement as largely symbolic, pointing out that ENARSA
brings little to the table in the way of financial resources. (Note:
ENARSA has virtually no capital; its assets consist of the
ownership of all survey/concession rights of as yet unawarded
Argentine offshore fields. End Note.)
--------------
Ship Construction
--------------
6. (SBU) In a deal originally structured in 2004 and valued at up
to $240 million, an Argentine shipyard in the province of Buenos
Aires, Astillero Rio Santiago, is to build up to four petroleum
product tankers for Petroleos de Venezuela (PDVSA) in a joint
venture with PDV Marina, a PDVSA affiliate, and Diques y Astilleros
Nacionales de Venezuela. The vessels are to be constructed using
Venezuelan steel. While the first ship, the 47,000 ton "Eva Peron,"
was due to be completed in 2007, Planning Ministry officials report
significant delays. Under the original agreement, construction of
the two final ships is contingent on timely delivery of the first
two.
--------------
Comment
--------------
7. (SBU) The promise of a second round of Venezuelan debt funding
appears to be the key GoV deliverable that President Kirchner hopes
to take away from this visit. The Casa Rosada continues to tell us
that the relationship with Caracas remains principally commercial,
and that they don't share Chavez's ideology or put much stock in his
Bolivarian ambitions. Prominent Argentine political and economic
analysts told the Ambassador last week that, on the one hand, most
South American leaders do not want to get too close to Chavez, but
on the other do not want to do anything to upset him. The GoA will
continue to exploit what they see as an important economic and
commercial relationship with Venezuela while downplaying, at least
to the U.S., its political significance.
WAYNE
SIPDIS
SIPDIS
SENSITIVE
EB/CBA FOR FMERMOUND, DENNIS WINSTEAD
EB/IFD/OIA FOR WSCHOLZ, MTRACTON
WHA FOR WHA/BSC AND WHA/EPSC
E FOR THOMAS PIERCE
PASS NSC FOR JOSE CARDENAS
PASS FED BOARD OF GOVERNORS FOR PATRICE ROBITAILLE
PASS USTR FOR EEISSENSTAT, SCRONIN
TREASURY FOR AFAIBISHENKO, NLEE
USDOC FOR 4322/ITA/MAC/OLAC/PEACHER
US SOUTHCOM FOR POLAD
E.O. 12958: N/A
TAGS: EINV ECON ENRG EPET AR
SUBJECT: PRESIDENT KIRCHNER'S FEB 21 VISIT TO VENEZUELA: ECONOMIC
COOPERATION ON DISPLAY
Ref: (a) Buenos Aires 55
(b) 06 Buenos Aires 2240
--------------
Summary
--------------
1. (SBU) President Kirchner travels February 21 to Puerto Ordaz,
Venezuela with an agenda that is principally economic: He will seek
to confirm GoV assistance in placing up to $2 billion in new
Argentine sovereign debt; finalize $135 million GoV rescue funding
for SanCor, an emblematic Argentine dairy cooperative; and discuss
expanded cooperation between GoA national oil company ENARSA and the
GoV's PDVSA in a possible joint exploration and development activity
in Venezuela's Orinoco region. Other likely topics of conversation
will include the proposed $20-billion-plus Venezuela to Argentine
natural gas pipeline (discounted by energy experts here as not
economically viable) and a $240 million contract for an Argentine
shipyard to build four petroleum product tankers for PDVSA using
Venezuelan steel. Our GoA contacts continue to emphasize that
Argentina's relationship with Caracas remains pragmatic and
principally driven by economic considerations, and that they share
neither Chavez's social ideology nor his Bolivarian ambitions. END
SUMMARY
--------------
Argentina Seeks Additional GoV Bond Support
--------------
2. (U) President Kirchner's planned February 21 visit is currently
being advanced by Planning Minister De Vido and Santa Fe province
Governor Obeid (where SanCor is based). The final Kirchner
delegation will include Minister De Vido, Economy Minister Miceli,
her Finance Secretary Chodos and her Legal Secretary Palomenque.
3. (SBU) Embassy Economy Ministry contacts report that ongoing
GoA/GoV discussions may lead to the announcement during Kirchner's
visit of the GoV's purchase of a new "Boden" bond issue and/or a
second joint bond issue (the "Bono del Sur II" - Ref B). Local
media is speculating that the GoV may purchase up to $2 billion in
GoA bonds, roughly one-third of GoA's planned financing of about
$6-7 billion for 2007. A new joint bond could be similar to the
initial Bono del Sur issued in November 2006, a package of (1) a
Venezuelan bond denominated in Bolivars, and (2) a
dollar-denominated Argentina bond. There were no cross default
clauses in the original Bono del Sur issue; international financial
markets called the exercise largely cosmetic and quickly stripped
out its component bonds for independent trading.
--------------
SanCor Dairy Cooperative Rescue
--------------
4. (SBU) Planning Minister De Vido and Santa Fe Governor Obeid are
now in Caracas wrapping up an agreement whereby the GoV's
state-owned Banco Nacional de Desarrollo Economico y Social de
Venezuela (BANDES) will provide a $135 million assistance package to
Argentina's second largest dairy cooperative, SanCor, in exchange
for long term payments in the form of powdered milk and technology
transfer. Our Planning Ministry contacts report some GoA annoyance
at repeated GoV delays in finalizing this SanCor assistance package;
this delay has also been widely reported in the local media. The
financially troubled diary cooperative was to have been sold to a
Soros-linked investment fund before this GoV "rescue offer" was
accepted by SanCor in the fall of 2006.
--------------
Joint ENARSA and PDVSA Exploration
--------------
5. (SBU) Planning Ministry contacts report that Kirchner and Chavez
will also sign an agreement to have GoA national oil company ENARSA
(formed in 2004) participate with the GoV-owned Petroleos de
Venezuela (PdVSA) in an Ayacucho upstream exploration block in
Venezuela's Orinoco region. Independent energy analysts in Buenos
Aires note GoA efforts to encourage Argentine private sector
participation in this exploration initiative, with the Techint
Group's Pluspetrol and Tecpetrol being courted as potential joint
venture partners. These analysts see any GoA/GoV petroleum
exploration agreement as largely symbolic, pointing out that ENARSA
brings little to the table in the way of financial resources. (Note:
ENARSA has virtually no capital; its assets consist of the
ownership of all survey/concession rights of as yet unawarded
Argentine offshore fields. End Note.)
--------------
Ship Construction
--------------
6. (SBU) In a deal originally structured in 2004 and valued at up
to $240 million, an Argentine shipyard in the province of Buenos
Aires, Astillero Rio Santiago, is to build up to four petroleum
product tankers for Petroleos de Venezuela (PDVSA) in a joint
venture with PDV Marina, a PDVSA affiliate, and Diques y Astilleros
Nacionales de Venezuela. The vessels are to be constructed using
Venezuelan steel. While the first ship, the 47,000 ton "Eva Peron,"
was due to be completed in 2007, Planning Ministry officials report
significant delays. Under the original agreement, construction of
the two final ships is contingent on timely delivery of the first
two.
--------------
Comment
--------------
7. (SBU) The promise of a second round of Venezuelan debt funding
appears to be the key GoV deliverable that President Kirchner hopes
to take away from this visit. The Casa Rosada continues to tell us
that the relationship with Caracas remains principally commercial,
and that they don't share Chavez's ideology or put much stock in his
Bolivarian ambitions. Prominent Argentine political and economic
analysts told the Ambassador last week that, on the one hand, most
South American leaders do not want to get too close to Chavez, but
on the other do not want to do anything to upset him. The GoA will
continue to exploit what they see as an important economic and
commercial relationship with Venezuela while downplaying, at least
to the U.S., its political significance.
WAYNE