PETROCARIBE STILL STALLED

UNCLAS PORT AU PRINCE 001253 SIPDIS SENSITIVE SIPDIS STATE FOR WHA/EX AND WHA/CAR S/SRS DRL WHA/EPSC FOR FAITH CORNEILLE, ED MARTINEZ EB/IFD TREASURY FOR JEFFREY LEVINE COMMERCE FOR SCOTT SMITH E.O. 12958: N/A TAGS: ENRG EPET ECON EAID PGOV PREL HA SUBJECT: PETROCARIBE STILL STALLED REF: PORT AU PRINCE 830 ¶1. This message is sensitive but unclassified -- please protect accordingly. ¶2. (SBU) SUMMARY: Negotiations between the GOH and fuel vendors operating in Haiti to implement the PetroCaribe agreement with Venezuela remain stalled. The GoH sought to conclude arrangements by July 1 (reftel),but the head of Haiti's PetroCaribe Office, Michael Lecorps, revealed to Econoff that the GoH will not yet attempt to impose a deadline on the companies. In separate conversations with Econoff in early July, representatives from Texaco and Esso continue to worry about depending on a sole supplier (Venezuela) for the Haitian market, local insecurity, and the worsening relationship between the USG and the Chavez government. Officials from the locally-owned Dynasa chain of gas stations sympathize with their industry colleagues, but affirmed that Dynasa will adhere to GoH policy. Though all parties expect they will conclude some kind of agreement, we see impetus to resolve the issues between them in the near term. End Summary. ¶3. (SBU) Lecorps on July 5 confirmed to Econoff that the GoH was struggling to come to terms with Texaco, Esso, Total, and Dynasa to implement the PetroCaribe agreement. A GoH meeting with the firms on July 3 produced no agreement, and Lecorps admitted that the GoH had imposed no new deadline, though he maintained that the discussions remained urgent and would continue throughout July. Lecorps was confused as to why U.S. companies are unwilling to purchase their oil from a sole supplier, noting they already purchase 99.9 percent of their oil from Venezuela's state oil company (PDVSA),the same vendor that the GoH will use. Lecorps emphasized the GOH's flexibility and patience in dealing with the firms, recognizing they provide an essential service to Haiti. He stressed the need for collaboration between the government and the oil companies, but insisted that the GoH will take the necessary measures to implement PetroCaribe. ¶4. (SBU) Eustache St. Lott, Area Manager for Esso in Haiti, told Econoff that purchasing oil solely from the GOH is not in Esso's best interest given Haiti's unpredictable security situation and past instability. Chevron's Retail District Manager Patryck Peru-Dumesnil concurred with St. Lott that negotiations continue to drag because of the reservations of upper management. Peru-Dumesnil stated that the Haitian market is profitable, but is uncertain of the financial impact, particularly on retailers. He confirmed the possibility that Shell could take the place of Chevron in transporting petroleum to Haiti if Chevron chooses not accept new terms. ¶5. (SBU) Michel Guerrier, the general controller of Dynasa, affirmed to Econoff on July 10 that while Dynasa was in the same situation as the other gasoline vendors, as a locally owned enterprise it is obliged to support the GoH. He claimed the primary obstacle in the negotiations was Chevron's reluctance to come to terms to continue to deliver petroleum to Haiti. The GOH, he surmised, does not want to resort to pressure, but will do so if the companies do not demonstrate willingness to conclude a new arrangement. ¶6. (SBU) Comment: Representatives seem to accept that the government may eventually force them to accept PetroCaribe terms, but in the near term, they appear to hold most of the negotiating cards. Haiti depends entirely on the private firms to manage the import, distribution, and sale of gasoline and other petroleum products and has no other expertise at hand. In light of Haiti's weak infrastructure and precarious distribution system, the departure of any of the four companies from the market could severely disrupt the supply of gasoline throughout the country. GoH has already negotiated an exemption from the standard PetroCaribe agreement requiring it to manage the accord through a state-owned oil company. SANDERSON =======================CABLE ENDS============================