CHEVRON SIGNS PETROCARIBE AGREEMENT WITH GOH

C O N F I D E N T I A L PORT AU PRINCE 000234 SIPDIS SENSITIVE SIPDIS STATE FOR WHA/CAR WHA/EPSC FOR FAITH CORNEILLE, ED MARTINEZ EB/IFD STATE PASS TO USAID FOR LAC/CAR TREASURY FOR JEFFEREY LEVINE COMMERCE FOR SCOTT SMITH E.O. 12958: DECL: 02/13/2018 TAGS: ENRG EPET ECON POL EAID HA SUBJECT: CHEVRON SIGNS PETROCARIBE AGREEMENT WITH GOH REF: A. 07 PORT AU PRINCE 1416 ¶B. 07 PORT AU PRINCE 1679 Classified By: Ambassador Janet A. Sanderson for reasons 1.4 (b) and (d ). ¶1. (C) Michael Lecorps, Director General for the Government of Haiti's (GoH) Office of Monetization within the Ministry of Finance, told Econoff on January 25 that Chevron signed a three-year contract the week of January 21 with the GoH under the PetroCaribe arrangement to purchase refined oil products produced by the Venezuelan state-owned oil company PDVSA from the GoH through private sector oil traders. (Note: The Office of Monetization, responsible for managing PetroCaribe in Haiti, was previously in the Ministry of Planning. End note.) Chevron also agreed to ship the refined petrol on one of its tankers. The GoH expects to receive a PetroCaribe shipment in late February or early March. The two other oil companies operating in Haiti, Total (French-owned) and Dynasa (a Haitian company) are still negotiating with the GoH. Patryck Peru-Dumesnil (protect),Chevron's Haiti Retail Manager, told Econoff on January 30 that he suspects Total will sign an agreement with the GoH soon, but finds it "strange" that Dynasa, a Haitian company, has not. (Note: As of March 1, ExxonMobil (Esso) will no longer operate in Haiti (Ref B). End note.) ¶2. (C) Peru-Dumesnil told Econoff that Chevron management in the U.S. does not want to make a lot of "noise" about the agreement because they do not want to appear to support PetroCaribe. Peru-Dumesnil noted that Chevron has been experiencing some trouble with product delivery from PDVSA in and outside of Haiti. Most recently, PDVSA suspended shipment of 'Premium' 95 oil because of problems at a refinery in Venezuela. Peru-Dumesnil is not certain when PDVSA will resume shipment of the 'Premium' oil. He also said that Venezuelan President Chavez has invested very little in the maintenance and improvement of PDVSA facilities while noting that PDVSA has decreased production by 28 percent. Peru-Dumesnil added that PDVSA's inefficiency is attributed to Chavez's dismissal of approximately 15,000 PDVSA employees after the attempted coup in 2003. He subsequently filled the vacancies with military and close friends with little or no competency in the oil industry. He noted that the next three months would be "unpredictable". ¶3. (C) Partially addressing Peru-Dumesnil's concern over PDVSA's ability to supply refined products under PetroCaribe, the GoH agreement allows Chevron and the other companies to purchase oil from another source in the event that PDVSA cannot supply the oil. However, Peru-Dumesnil stressed that finding another source is difficult, requires considerable lead-time and would inevitably affect the cost of oil for the companies. He explained that after almost two years of negotiating and educating the GoH on oil industry operations, Chevron finally obtained its desired terms from the GOH. However, the feasibility of the PetroCaribe scheme that inserts the GOH into the purchase and sales chain remains unproven. PDVSA will sell to the GoH, which will then sell to private oil traders, who finally will sell to the oil companies in Haiti for distribution. SANDERSON =======================CABLE ENDS============================