Identifier
Created
Classification
Origin
07CARACAS1365
2007-07-09 19:56:00
CONFIDENTIAL
Embassy Caracas
how-toVZCZCXRO7185 RR RUEHDE DE RUEHCV #1365/01 1901956 ZNY CCCCC ZZH R 091956Z JUL 07 FM AMEMBASSY CARACAS TO RUEHC/SECSTATE WASHDC 9207 INFO RUEHHH/OPEC COLLECTIVE RUEHAC/AMEMBASSY ASUNCION 0840 RUEHBO/AMEMBASSY BOGOTA 7410 RUEHBR/AMEMBASSY BRASILIA 5950 RUEHBU/AMEMBASSY BUENOS AIRES 1635 RUEHLP/AMEMBASSY LA PAZ 2543 RUEHPE/AMEMBASSY LIMA 0815 RUEHSP/AMEMBASSY PORT OF SPAIN 3439 RUEHQT/AMEMBASSY QUITO 2635 RUEHSG/AMEMBASSY SANTIAGO 3962 RUEHDG/AMEMBASSY SANTO DOMINGO 0461 RUMIAAA/HQ USSOUTHCOM MIAMI FL RHEHAAA/WHITEHOUSE WASHDC RHEBAAA/DEPT OF ENERGY RUCNDT/USMISSION USUN NEW YORK 0879 RUCPDOC/DEPT OF COMMERCE RUEATRS/DEPT OF TREASURY RHEHNSC/NSC WASHDC
C O N F I D E N T I A L SECTION 01 OF 02 CARACAS 001365
SIPDIS
SIPDIS
ENERGY FOR CDAY AND ALOCKWOOD
NSC FOR DTOMLINSON AND JSHRIER
E.O. 12958: DECL: 01/12/2017
TAGS: EPET ENRG EINV ECON VE
SUBJECT: A PEAK INSIDE CITGO
Classified By: Economic Counselor Andrew N. Bowen for Reason 1.4 (D)
C O N F I D E N T I A L SECTION 01 OF 02 CARACAS 001365
SIPDIS
SIPDIS
ENERGY FOR CDAY AND ALOCKWOOD
NSC FOR DTOMLINSON AND JSHRIER
E.O. 12958: DECL: 01/12/2017
TAGS: EPET ENRG EINV ECON VE
SUBJECT: A PEAK INSIDE CITGO
Classified By: Economic Counselor Andrew N. Bowen for Reason 1.4 (D)
1. (C) SUMMARY: A senior Citgo representative stated the sale
of two asphalt refineries has been delayed due to concerns
over supply contracts. Citgo president Alejandro Granado has
adopted an extravagant lifestyle and is not accessible to
employees. Citgo executives focus on the company's fuel oil
program for the poor to the detriment of other operations.
END SUMMARY
--------------
SALE OF ASPHALT REFINERIES DELAYED
--------------
2. (C) Petroleum Attache and Economic Specialist met with a
senior Citgo executive on June 28 to discuss the current
state of the company. The executive began the conversation
by stating the sale of Citgo's two asphalt refineries in
Paulsboro, New Jersey and Savannah, Georgia had been delayed
over concerns regarding the refineries' supply contracts.
Four consortia have placed bids on the refineries and the
terms of the sale were supposed to have been announced on
June 25. However, the consortia expressed concerns over the
refineries' supply contracts and Citgo is negotiating with
all of them over the terms of the contracts. The executive
thought the negotiations on supply terms would take several
weeks.
3. (C) According to the executive, the sale of the
refineries encompasses their entire asphalt operation and
includes 25 terminals. However, the executive stated the
supply contracts were a key component of the sale. He stated
there are two supply contracts: one for 30,000 barrels per
day of Bachaquero crude (10.7 API and 2.78% sulfur) and
another for 20,000 barrels per day of Boscan (10.2 API and
5.52% sulfur). Due to the type of steel used in the Savannah
refinery, it can only take Boscan crude. The executive
stated the refinery was built with Boscan crude in mind and
the loss of the supply contract would render it useless.
Refitting Savannah to take other types of crude is impossible
due to space limitations and the fact that the refinery would
have to be rebuilt from scratch. The Paulsboro refinery is
more flexible and could be successfully refitted.
--------------
A NEW SHERIFF IN TOWN
--------------
4. (C) PDVSA vice president for refining Alejandro Granado
was appointed president and CEO of Citgo in May. Granado has
served as chairman of Citgo's board of directors for the past
two years and retained that position. The Citgo executive
stated Granado arrived on his first day as president in a
white limousine. He added Granado and his wife also demanded
luxurious housing at company expense. According to the
executive, Granado has not been open with senior executives
and only maintains contact with a small group of insiders.
The executive complained that the insiders spend most of
their time focused on Citgo's fuel oil program for the poor
rather than company operations. He also noted that valued
employees have resigned due to the company's new work
environment. One American employee in the asphalt division
wrote a heated letter stating he would never work for a
company that belonged to a government that belittled the
United States.
5. (C) The Citgo executive bitterly joked that Granado, a
fervent supporter of the Bolivarian revolution, was not
acting like a good revolutionary. Granado's behavior
contrasts sharply with his predecessor, Felix Rodriguez.
According to the executive, Rodriguez drove himself to work
in a Honda and ate in the employee cafeteria. He also was
CARACAS 00001365 002 OF 002
open to employees approaching him directly with issues.
6. (C) When asked if Granado's assumption of the Citgo
signaled that PDVSA was finally going to sell the company,
the executive stated he was not sure. He said he did not
understand why Granado took the position since it appeared to
be a demotion. As vice president of refining at PDVSA,
Granado ran all of PDVSA's domestic and international
refining operations, including Citgo's refineries.
FRENCH
SIPDIS
SIPDIS
ENERGY FOR CDAY AND ALOCKWOOD
NSC FOR DTOMLINSON AND JSHRIER
E.O. 12958: DECL: 01/12/2017
TAGS: EPET ENRG EINV ECON VE
SUBJECT: A PEAK INSIDE CITGO
Classified By: Economic Counselor Andrew N. Bowen for Reason 1.4 (D)
1. (C) SUMMARY: A senior Citgo representative stated the sale
of two asphalt refineries has been delayed due to concerns
over supply contracts. Citgo president Alejandro Granado has
adopted an extravagant lifestyle and is not accessible to
employees. Citgo executives focus on the company's fuel oil
program for the poor to the detriment of other operations.
END SUMMARY
--------------
SALE OF ASPHALT REFINERIES DELAYED
--------------
2. (C) Petroleum Attache and Economic Specialist met with a
senior Citgo executive on June 28 to discuss the current
state of the company. The executive began the conversation
by stating the sale of Citgo's two asphalt refineries in
Paulsboro, New Jersey and Savannah, Georgia had been delayed
over concerns regarding the refineries' supply contracts.
Four consortia have placed bids on the refineries and the
terms of the sale were supposed to have been announced on
June 25. However, the consortia expressed concerns over the
refineries' supply contracts and Citgo is negotiating with
all of them over the terms of the contracts. The executive
thought the negotiations on supply terms would take several
weeks.
3. (C) According to the executive, the sale of the
refineries encompasses their entire asphalt operation and
includes 25 terminals. However, the executive stated the
supply contracts were a key component of the sale. He stated
there are two supply contracts: one for 30,000 barrels per
day of Bachaquero crude (10.7 API and 2.78% sulfur) and
another for 20,000 barrels per day of Boscan (10.2 API and
5.52% sulfur). Due to the type of steel used in the Savannah
refinery, it can only take Boscan crude. The executive
stated the refinery was built with Boscan crude in mind and
the loss of the supply contract would render it useless.
Refitting Savannah to take other types of crude is impossible
due to space limitations and the fact that the refinery would
have to be rebuilt from scratch. The Paulsboro refinery is
more flexible and could be successfully refitted.
--------------
A NEW SHERIFF IN TOWN
--------------
4. (C) PDVSA vice president for refining Alejandro Granado
was appointed president and CEO of Citgo in May. Granado has
served as chairman of Citgo's board of directors for the past
two years and retained that position. The Citgo executive
stated Granado arrived on his first day as president in a
white limousine. He added Granado and his wife also demanded
luxurious housing at company expense. According to the
executive, Granado has not been open with senior executives
and only maintains contact with a small group of insiders.
The executive complained that the insiders spend most of
their time focused on Citgo's fuel oil program for the poor
rather than company operations. He also noted that valued
employees have resigned due to the company's new work
environment. One American employee in the asphalt division
wrote a heated letter stating he would never work for a
company that belonged to a government that belittled the
United States.
5. (C) The Citgo executive bitterly joked that Granado, a
fervent supporter of the Bolivarian revolution, was not
acting like a good revolutionary. Granado's behavior
contrasts sharply with his predecessor, Felix Rodriguez.
According to the executive, Rodriguez drove himself to work
in a Honda and ate in the employee cafeteria. He also was
CARACAS 00001365 002 OF 002
open to employees approaching him directly with issues.
6. (C) When asked if Granado's assumption of the Citgo
signaled that PDVSA was finally going to sell the company,
the executive stated he was not sure. He said he did not
understand why Granado took the position since it appeared to
be a demotion. As vice president of refining at PDVSA,
Granado ran all of PDVSA's domestic and international
refining operations, including Citgo's refineries.
FRENCH