PETROCARIBE #35: ST. KITTS AND PETROCARIBE

C O N F I D E N T I A L BRIDGETOWN 000124

SIPDIS

SIPDIS

DEPARTMENT FOR WHA/CAR, WHA/AND, WHA/EPSC, AND
EEB/ESC/IEC/EPC
CARACAS FOR ANDREW BOWEN
SOUTHCOM ALSO FOR POLAD

E.O. 12958: DECL: 02/28/2018
TAGS: ENRG PREL PGOV PINR XL VE
SUBJECT: PETROCARIBE #35: ST. KITTS AND PETROCARIBE

REF: 07 BRIDGETOWN 1561

Classified By: Pol Officer Arend Zwartjes for reasons 1.4 (b) and (d).


1. (SBU) Summary: St. Kitts and Nevis has begun preparations
for hosting the Fifth Petrocaribe Summit. Meanwhile, the
Venezuelan energy initiative appears to be gaining momentum
in the country, following the first successful delivery of
Petrocaribe fuel in December 2007 and evolving plans for the
building of a fuel storage facility in St. Kitts. Government
contacts continue to try to ease Embassy concerns regarding
the nation's involvement in Petrocaribe, while Chevron
continues to operate on the island, waiting to see how the
situation will play out. End summary.


2. (SBU) PolOff met with St. Kitts and Nevis Permanent
Secretary in the Ministry of Public Works, Oaklyn Peets, to

SIPDIS
discuss the country's preparations for the next Petrocaribe
Summit, set to take place there on June 15, 2008. Peets, the
self-described "point man" for the GOSKN on Petrocaribe,
admitted that prior to the announcement at the Fourth
Petrocaribe Summit in Cienfuegos (reftel),he and the GOSKN
had no idea that St. Kitts would be hosting the next summit.
Peets confirmed that many Heads of Government will attend the
next summit, including Nicaragua's Ortega and Venezuela's
Chavez. Since Peets was formerly a Permanent Secretary in
the Prime Minister's office, he says he has much experience
in such visits and is confident there is ample time to
prepare for the summit.

A Practical Deal
--------------


3. (C) Peets explained to PolOff that he had been the driving
force behind St. Kitts and Nevis's membership in Petrocaribe.
He was eager to ask PolOff, "how does the United States view
all of this?", and admitted that "Chavez is unpredictable",
making his country's membership in the deal somewhat
delicate. Peets, whose brother lives in the United States
and makes pains to emphasize his personal good will towards
America, further emphasized that St. Kitts and Nevis has no
plans to join Venezuela's economic alliance, ALBA (the
Bolivarian Alternative for the Americas).


4. (C) According to Peets, the cash-strapped nation's
decision to join Petrocaribe was a practical one. He claimed
that previously, when the government was solely dependent on
Chevron-Texaco for its oil, if the government was even a day
late, the company would shut off the supply. Since the GOSKN
is heavily indebted, Petrocaribe allows deferred payments and
a steady supply of energy at good rates. (Comment: This
claim is dubious at best, and perhaps most represents the
GOSKN's desire to appear hand-tied into joining Petrocaribe,
rather than sharing any ideological affinity with Venezuela.
End Comment).

Next Steps for Petrocaribe in SKN
--------------


5. (C) Peets noted that St. Kitts and Nevis has not yet
signed Petrocaribe's "Energy Security Treaty," which he
described as an agreement to pursue wind, solar and other
alternative energy sources meant to complement the energy
derived from Petrocaribe oil. Peets said that St. Kitts
could not sign the treaty before since they had not actually
received anything from Petrocaribe; now that the first
shipment of fuel arrived in December, the country may be able
to do so soon. As regards Venezuela's announcement that they
will build a fuel storage facility in St. Kitts, Peets
confirmed that PDVSA has already incorporated a local
company, PDVSKN, and plans to begin construction in April
using Venezuelan managers and local labor. Construction is
expected to take 14-17 months.

Chevron-Texaco: Watching Anxiously From the Sidelines
-------------- --------------


6. (C) Chevron-Texaco operates one of the two oil depots on
St. Kitts, and District Manager Algernon Cargill (based in
Puerto Rico) explained to PolOff that the company is
"concerned" about the moves towards Petrocaribe in the
region. Cargill (the district manager for St. Kitts and
Nevis, Antigua and Barbuda, Dominica and St. Lucia) explained
that Chevron-Texaco has made long-term investments in each of
the Eastern Caribbean nations and is worriedly watching how
the Petrocaribe situation will develop in the region. He
adamantly maintained that Chevron-Texaco has never and would
never cease supplies due to a late payment, in direct
contradiction to Peets' claim. Cargill further noted the
contributions the company had made to the community of St.
Kitts, citing ongoing donations to local schools.

Comment
--------------


7. (C) In contrast to St. Vincent and the Grenadines, where
membership in Petrocaribe appears to reflect at least some
level of sympathy for the ideologies of Chavez, St. Kitts and
Nevis' involvement in the oil program is almost certainly
about money. The people of St. Kitts and Nevis (such as
Peets) have strong cultural and family roots to the United
States, and are therefore wary of causing strains in the
bilateral relationship. The government's weak financial
status, especially given the recent and sudden shift from a
sugar-based economy to a tourism-based one, is most likely
the motivating factor behind the GOSKN's involvement in
Petrocaribe. The GOSKN is also aggressively pursuing both
biofuels and the potential for geothermal energy production
in Nevis, which should serve to offset at least some of
Venezuela's efforts to buy influence with cheap oil. As the
next summit approaches, it will be interesting to see how the
government attempts to downplay the political overtones of
Petrocaribe, especially when Chavez brings his rhetoric to
this tiny, pro-U.S. country. End comment.
OURISMAN