PORTUGAL PM SOCRATES WINS PLEDGE OF 30,000 BPD

C O N F I D E N T I A L CARACAS 000670 SIPDIS HQSOUTHCOM ALSO FOR POLAD DEPT FOR AID/OTI (RPORTER) E.O. 12958: DECL: 05/15/2018 TAGS: PGOV PREL ENGR EINV ECON PO VE SUBJECT: PORTUGAL PM SOCRATES WINS PLEDGE OF 30,000 BPD FROM BRV IN RETURN FOR FOOD, TECHNOLOGY ASSISTANCE REF: LISBON 001130 Classified By: ACTING POLITICAL COUNSELOR DANIEL LAWTON, REASON 1.4 (D) ¶1. (C) Summary: Portuguese Prime Minister Jose Socrates won pledges of 30,000 barrels of oil per day from Venezuelan President Hugo Chavez while on a May 13-15 state visit to the Bolivarian Republic. Portugal will pay for the oil, estimated by Chavez as having an annual value of USD 1 billion, in food and technology assistance. Similar accords signed by Venezuela with other countries in the past have not always been completed or implemented. Chavez appears to have used the May 13 joint press conference to bolster his image after the recent spat with German Chancellor Merkel and in anticipation of Interpol's report on Venezuelan cooperation with the FARC. End Summary. ¶2. (U) At the press conference, held at the Miraflores Presidential Palace in Caracas, Chavez and Socrates announced that, in addition to the energy-for-food agreement, Portuguese oil company Petrogal would jointly certify reserves in the Boyaca 6 block in Venezuela's Orinoco region with Venezuela's state-owned oil company Petroleos de Venezuela (PDVSA). PDVSA President and Oil and Energy Minister Rafael Ramirez estimated there could be 72 billion barrels of oil at the site. Galp and PDVSA agreed to jointly develop a two train liquefied natural gas project. The two trains will handle 1,600 million cubic feet per day, or nearly 10 million tons, according to Ramirez. At the press conference, Chavez said he hoped the Venezuelan proven oil reserves would reach 300 billion barrels in 2009. Galp and PDVSA also signed a MOU for three pilot projects that will generate electricity via windpower. ¶3. (U) In the energy-for-food deal, similar to others signed recently by the BRV, Venezuela expects to receive 5,000 tons of powdered milk, 21,000 tons of soybean oil, and 7,000 tons of pasta. Portugal will also repair 3 PDVSA oil tankers as part of the agreements. -------------- Comment -------------- ¶4. (C) Chavez and Venezuelan state media gave prominent attention to the Socrates visit in an apparent effort to bolster the Venezuelan President's statesman credentials. Chavez appeared particularly interested in exploiting the visit of a prime minister from an EU member state. Socrates' visit comes on the heels of Chavez publicly calling German Chancellor Angela Merkel an ideological successor to Hitler and just before Interpol validates the hard drives the Colombian government recovered from the FARC containing damaging evidence of BRV-FARC ties. ¶5. (C) As is the case with most of the Faja certification deals, the question remains whether the Portuguese will actually get to develop the block. It is also questionable whether Petrogal has the necessary expertise and deep pockets to carry out a major extra heavy crude oil project. DUDDY