NIGERIA: CHEVRON SELLING DOWNSTREAM RETAIL OPERATION

C O N F I D E N T I A L ABUJA 000905 SIPDIS DOE FOR GPERSON AND CHAYLOCK E.O. 12958: DECL: 05/09/2012 TAGS: ECON EPET ENRGY NI SUBJECT: NIGERIA: CHEVRON SELLING DOWNSTREAM RETAIL OPERATION Classified By: Deputy Chief of Mission Lisa Piascik for reasons 1.4 (b & d). ¶1. (C) SUMMARY: Ruben Halfhuid, General Manager for Chevron Retail West Africa met with Ambassador Sanders on April 9 to brief the Ambassador on Chevron's planned sale of its downstream retail operation. The business unit operates a terminal and several manufacturing and storage facilities as well as more than 300 Texaco-branded retail service stations and supplies Texaco fuels to 203 third-party-owned outlets. A large number of expressions of interest have been received to-date and a notice will be sent the week of May 5th to those invited in the first bidding round and the formal bids are expected the week of May 26th. Formal negotiations with the top bidders is planned for June 9th, and the sale will be finalized mid 2009. END OF SUMMARY. ¶2. (C) Halfhuid reported that a global corporate review of all Chevron business units resulted in the decision to sell the retail units. Chevron will also sell its downstream operations in Kenya, Uganda, Togo, Congo, Cameroon, Benin, and Cote D'Ivore. While the businesses are financially healthy, market position is low, and profits are down for the West Africa business units because of high safety costs, product quality problems, and rising organizational expenses. COMMENT: After the meeting with the Ambassador, Halfhuid told ECONOFF that the business operating profit is $12 million (2.6%),which is an indicator that there is a difficulty in the efficiency of the operation. END COMMENT. ¶3. (SBU) Halfhuid explained that U.S. Embassies and appropriate government entities in the affected countries were notified the week of April 9. Chevron received unsolicited offers for the downstream operations because rumors were circulating. ¶4. (SBU) Halfhuid emphasized that Chevron spent significant time with the stakeholders, union, and various government entities such as the Ministry of Energy for Petroleum, Nigerian National Petroleum Company (NNPC),and the Minister of Labor before issuing their press release. Chevron expects the sale to be finalized mid 2009. It is important to Chevron that the sale be fully transparent with the due diligence performed by BNP Paribas. ¶5. (C) Ambassador Sanders suggested Halfuid meet with the editorial staff of several key newspapers and brief the Minister of Commerce and Industry. COMMENT: Halfuid reported by telcon with ECONOFF on May 2 that the meeting with the Minister of Commerce went very well as did the meeting with the General Managing Director of NNPC. END COMMENT. SANDERS