GOH SETS JULY 1 PETROCARIBE DEADLINE

UNCLAS SECTION 01 OF 02 PORT AU PRINCE 000830 SIPDIS SENSITIVE SIPDIS NSC FOR FISK STATE FOR WHA/CAR S/CRS 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 HA SUBJECT: GOH SETS JULY 1 PETROCARIBE DEADLINE REF: A. PORT AU PRINCE 819 ¶B. PORT AU PRINCE 522 ¶C. PORT AU PRINCE 78 ¶D. 06 PORT AU PRINCE 1905 PORT AU PR 00000830 001.2 OF 002 ¶1. This message is sensitive but unclassified -- please protect accordingly. ¶2. (SBU) Summary: ExxonMobil representatives, led by Caribbean Sales Manager Bill Eisner, told Ambassador Sanderson on April 26 that the head of Haiti's Petrocaribe office, Michael Lecorps, gave the four oil companies operating in Haiti until July 1 to sign the GoH contract on Petrocaribe. ExxonMobil's final message to the GoH, based on their overall industry experience and Petorcaribe's record in the region, was that the contract should allow for some percentage of fuel imported from suppliers other than Venezuela's energy company, PDVSA. Eisner explained that the GoH will buy the fuel from Venezuela and sell it to the oil companies but expects the oil industry to otherwise coordinate the supply, shipping and storage aspects of the agreement directly with Venezuela. In various meetings, Lecorps has told Poloff that revisions to the Petrocaribe agreement signed by Haiti and Venezuela (refs A and B) have not changed anything for him, and that the arrival of the first Petrocaribe shipment will ''take time.'' End Summary. ¶3. (SBU) In a meeting with the Ambassador, Eisner and his colleagues recounted their meeting with Lecorps and finance ministry representatives on April 26. They all speculated that the July 1 deadline will ''come and go,'' but they did not voice their doubts to the GoH officials. Instead, Eisner focused on his concerns about the price structure of the agreement, the danger of relying on a single supplier, and the transport complications that would result from implementation of the agreement. Eisner and Lecorps also discussed the Dominican Republic's Petrocaribe experience, which has been a ''total disaster.'' In an earlier meeting, Lecorps told Poloff he was aware of all the technical difficulties, in terms of supply, transport and storage that the Dominican Republic was having with Petrocaribe. However, he later stated that the GoH had modified its contract with Venezuela so that it would not have the same problems as the Dominican Republic. (Note: When Venezuelan President Hugo Chavez visited Haiti mid-March, Preval forced him to sign a document allowing the oil companies to ship Petrocaribe products free on board (FOB) to Haiti -- refs B and C) ¶4. (SBU) Eisner assured the GoH that ExxonMobil understands that the financial benefits are attractive to Haiti. The company is willing to work with the GoH to implement the agreement, but not under the current proposal. (Note: The GoH declared that Venezuela would supply 100 percent of Haiti's energy needs in September, 2006 (ref D). End note.) The current contract turns the Haitian government into ExxonMobil's sole supplier, a responsibility the GoH is not ready to handle, according to Eisner. Eisner noted that Haiti would be the only Caribbean country to import 100 percent of the country's fuel demand through the Petrocaribe agreement: Jamaica currently receives 25,000 of 70,000 barrels per day (b/d) and the Dominican Republic 50,000 of 150,000 b/d. ¶5. (SBU) Eisner said he was shocked when he realized that Lecorps expected the oil industry to coordinate the Petrocaribe deal on behalf of the GoH. According to Eisner, the contract proposed by the GoH would make the oil industry prisoner to two incompetent governments, negating much of the industry's role in coordination. He also said that Lecorps, and presumably the GoH, hopes the four companies will sign the agreement voluntarily, instead of passing legislation obliging oil companies operating in Haiti to participate in the Petrocaribe agreement. Eisner observed that Lecorps seemed under extreme pressure from the GoH to turn the Petrocaribe agreement into tangible results. PORT AU PR 00000830 002.2 OF 002 ¶6. (SBU) Comment: Not a drop of petroleum has resulted from the initial agreement that newly inaugurated President Preval and the Venezuelan Vice President signed in May, 2006. Still, the GoH believes the agreement will bear fruit sometime this year, according to Lecorps. As ExxonMobil and Texaco (responsible for 45 percent of Haiti's total supply) representatives have told the Ambassador, they continue to ship fuel to Haiti regularly, and nothing so far has threatened to interfere. Lecorps told Poloff on May 2 that his superiors in the GoH ''do not understand the technical difficulties the Petrocaribe agreement entails,'' complaining that they expected him to move too quickly. Post has had the same experience with various GoH officials, who have demonstrated in conversations with the Ambassador and others that they have no expertise with the petroleum logistics. They understand the immediate financial benefits but have not thought through the rest, expecting that the oil companies will come through with their logistical know-how. SANDERSON =======================CABLE ENDS============================