T&T PM MANNING MEETS CHAVEZ, SIGNS GAS AGREEMENT

C O N F I D E N T I A L SECTION 01 OF 02 PORT OF SPAIN 000299

SIPDIS

SIPDIS

STATE FOR WHA/EPSC, WHA/CAR, EEB/ESC/IEC

E.O. 12958: DECL: 03/22/2017
TAGS: EPET ENRG EINV ECON VE TD
SUBJECT: T&T PM MANNING MEETS CHAVEZ, SIGNS GAS AGREEMENT

REF: A. PORT OF SPAIN 220

B. CARACAS 610

C. PORT OF SPAIN 233

Classified By: DCM Eugene P. Sweeney reasons 1.4 (b),(d)


1. (C) SUMMARY: T&T Prime Minister Patrick Manning met with
BRV President Hugo Chavez for four hours on March 20 and
signed a framework unitization agreement, a key step toward
joint development of substantial cross-border gas fields.
Manning also used the meeting as an opportunity to propose
broader cooperation on oil and gas, including supplying gas
to Jamaica and oil to PetroCaribe customers, and he announced
on his return that Chavez will visit Trinidad in mid-April.
Manning resisted pressure to formally sign on to PetroCaribe
and cited T&T's "irrevocable commitment" to the FTAA as the
reason he could not back Chavez' Bolivarian Alternative for
the Americas. Labor Minister Danny Montano told DCM that
lobbying by Jamaica and a phone call from Fidel Castro to
Chavez had helped break the log-jam in Venezuela-T&T
relations, but he underscored that Manning's trip to Caracas
was driven by economic necessity, not a desire to take sides
in any BRV-USG dispute. END SUMMARY.


2. (U) The framework unitization agreement signed by T&T
Prime Minister Manning and BRV President Hugo Chavez on March
20 sets ground rules for joint ownership and development of
several cross-border gas fields, but it does not specify on
which side of the border the gas will be monetized, nor for
what purpose. Individual unitization agreements still must
be signed for each field. The GOTT and BRV are set to move
first on the Loran/Manatee field, comprising an estimated 10
trillion cubic feet (TCF) of natural gas. The two sides have
agreed that 2.7 TCF of the Loran/Manatee gas belong to T&T
and 7.3 TCF belong to Venezuela.

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PM Manning gets a chance to pitch energy cooperation...
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3. (U) In public remarks to an energy sector audience in Port
of Spain March 21, Manning described several proposals he had
pitched to Chavez during their four-hour meeting in Caracas.
First, Manning proposed using the Loran/Manatee gas to supply
a new liquefied natural gas (LNG) train in Trinidad that
could meet Jamaica's need for 160 million cubic feet/day of
natural gas to support increased alumina production by Alcoa.
Manning observed that Venezuela has none of the
infrastructure in place to produce LNG or otherwise monetize
the Loran/Manatee gas, while T&T has infrastructure in close
proximity and enough capacity in existing pipelines to
transport the additional gas to Point Fortin in southeast
Trinidad, where T&T's four LNG trains are located. At the
same time, he suggested that T&T would share expertise to
help Venezuela develop its own LNG industry.


4. (U) Second, Manning proposed to Chavez that T&T "work with
PetroCaribe" by refining more Venezuelan crude for sale to
PetroCaribe customers, and in connection with that he invited
Venezuela to take an investment stake in a new refinery
project in Trinidad. Manning framed these proposals as a way
for T&T to continue its traditional role of guaranteeing
energy security in the Caribbean, even as Venezuela takes on
much of that responsibility as the "new dominant supplier" to
the region. At the same time he was careful not to say that
T&T would "sign up" for PetroCaribe.


5. (U) Manning said Chavez will visit Trinidad in mid-April
to sign an MOU based on his proposals for increased energy
cooperation. He also signaled that T&T will attend a gas
forum meeting organized by Venezuela, to be held in Margarita
April 16-17.


6. (U) Manning said he and Chavez agreed to disagree on
directions for hemispheric trade arrangements. In his March
21 remarks, Manning stressed that T&T is "irrevocably
committed" to the Free Trade Area of the Americas (FTAA) and
had enlisted CARICOM support in campaigning throughout Latin
America to host the FTAA secretariat and the 2009 Summit of
the Americas (which Manning referred to as "the next FTAA
meeting"). As such, he continued, it would undercut T&T's
credibility and integrity to sign on to Chavez' Bolivarian
Alternative for the Americas (ALBA).


PORT OF SP 00000299 002 OF 002


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...with a little help from Kingston and Havana
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7. (C) On the eve of Manning's trip to Caracas, GOTT Labor
Minister Danny Montano told DCM that two recent interventions
with Chavez had broken the long logjam in BRV-T&T relations,
which have been blocked since Venezuela launched PetroCaribe.
One was a phone call from Fidel Castro to Chavez asking that
he stop ignoring Manning's requests to meet and consider
making a deal with T&T on energy. Montano speculated that
St. Vincent and the Grenadines PM Ralph Gonsalves, who is
close to both Manning and Chavez, was able to convince Castro
to make this appeal to Chavez. The other was the lobbying of
the Jamaicans, as previously reported (reftel A).

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"We're not taking sides"
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8. (C) Montano insisted to DCM that Manning was making the
trip out of economic necessity, not a desire to take sides in
any BRV-US dispute. Montano underlined that it was
absolutely imperative for T&T,s future as an energy producer
that a unitization agreement be signed with Venezuela to
allow the exploitation of the two large cross border gas
fields. Energy accounts for the great bulk of T&T,s exports
and is the key to its economic well-being, but T&T,s proven
energy reserves are dwindling, currently estimated to run out
in 15 years at current rates of production. Montano stressed
that any agreement PM Manning signs with Chavez would never
constrain the GOTT in any way from continuing to supply oil
and gas to the U.S. He added in response to a question that
T&T would not/not join the PetroCaribe scheme nor would it
consider backing the Bolivarian Alternative for the Americas
(ALBA).


9. (C) COMMENT: PM Manning earned condemnation from the
Jamaican media and private sector when he had told Jamaican
leaders that T&T cannot supply LNG by 2009, but he also
opened the door for Chavez to promise LNG to Jamaica that
Venezuela will have difficulty delivering on its own (reftel
C). Manning's proposal to work with Venezuela on LNG and
PetroCaribe oil seem calculated to reassure CARICOM partners,
while keeping T&T out of the business of selling oil and gas
at a discount. His offer to refine more Venezuelan oil would
also ease financial pressure on Petrotrin, the state-owned
company that operates T&T's existing refinery and is already
reporting damage to its bottom line from loss of Caribbean
market share to PetroCaribe. It remains to be seen how much
of this Chavez will accept, but Manning's success in winning
Chavez' signature on the unitization agreement is already
boosting optimism in T&T's energy sector and giving new
momentum to plans for a fifth LNG train in Trinidad. END
COMMENT.
AUSTIN