PDVSA ANNOUNCES SUSPENSION OF COMMERCIAL RELATIONS

C O N F I D E N T I A L CARACAS 000175 SIPDIS SIPDIS ENERGY FOR CDAY AND ALOCKWOOD HQ SOUTHCOM ALSO FOR POLAD TREASURY FOR MMALLOY NSC FOR JCARDENAS AND JSHRIER COMMERCE FOR 4431/MAC/WH/MCAMERON E.O. 12958: DECL: 02/13/2018 TAGS: ECON EPET VE SUBJECT: PDVSA ANNOUNCES SUSPENSION OF COMMERCIAL RELATIONS WITH EXXONMOBIL REF: A. CARACAS 168 ¶B. BOWEN-DESK 2/13 E-MAILS Classified By: Economic Counselor Andrew N. Bowen for reasons 1.4 (b) a nd (d). ¶1. (C) In the evening of February 12, PDVSA issued a press release announcing that it would "suspend commercial relations and the supply of crude and products" to ExxonMobil in light of ExxonMobil's "unnecessary, intimidating, and hostile" legal actions (reftel). PDVSA promised to "fully honor existing contractual relationships pertaining to joint foreign investments with ExxonMobil, while reserving the right to end those contracts whose terms allow them to be rescinded." ExxonMobil's Government Relations Advisor for the Americas Milton Chaves (strictly protect) told EconCouns via telcon from Houston that: "Over the past two years ExxonMobil has imported an average of 30 thousand barrels per day (Kbd) of Venezuelan crude for U.S. refinery operations. Over the same time period Chalmette (a joint 50/50 ExxonMobil/PDVSA refinery operation in Louisiana) has imported on average 75Kbd. Chaves thought that the suspension would only affect the 30 Kbd of crude ExxonMobil was purchasing for its own refinery operations. (Note: According to the latest company-level import statistics available from the Energy Information Administration, Venezuela sent an average of 77.4 Kpd in November 2007 to the Chalmette refinery; but showed an average of 93.8 Kbd to ExxonMobil proper. If, indeed, only 30 Kbd is affected this is a relatively insignificant amount for XM. The oil sent to Chalmette comes from Petro Monagas, formerly the Cerro Negro strategic association and whose expropriation led to ExxonMobil's recent legal actions. PDVSA has a majority ownership of Petro Monagas. End note.) ¶2. (U) Also on February 12, the National Assembly approved a resolution that, among other points, urged the executive branch to withdraw from the International Centre for Settlement of Investment Disputes. During the afternoon of February 13, Minister of Popular Power for Energy and Petroleum Ramirez showed that the BRV is determined to see this as part of a larger struggle with the United States: "Nobody should be confused, this is not about a commercial dispute, or a disagreement over economic issues; this is a matter of one more step by North American imperialism in the economic war they have against our nation and government, to try to bring us to our knees." DUDDY