VENEZUELA: UPDATE ON TIDEWATER VESSELS AND

C O N F I D E N T I A L CARACAS 000707

SIPDIS

ENERGY FOR CDAY AND ALOCKWOOD, DOE/EIA FOR MCLINE
HQ SOUTHCOM ALSO FOR POLAD
TREASURY FOR RJARPE
COMMERCE FOR 4332/MAC/WH/JLAO
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E.O. 12958: DECL: 06/07/2019
TAGS: EPET EINV ENRG ECON VE
SUBJECT: VENEZUELA: UPDATE ON TIDEWATER VESSELS AND
POSSIBLE EXPROPRIATION

Classified By: Economic Counselor Darnall Steuart, for reasons 1.4 (b)
and (d).


1. (C) U.S. oil service firm Tidewater Senior Vice President
Gerry Kehoe and Country Representative Mikael Jakobs
(strictly protect throughout) on June 4 told Petroleum
AttachQ (PetAtt) and visiting Washington energy analyst that
Tidewater plans to send its two U.S.-flagged oil support
vessels with U.S. crews out of Venezuelan waters as early as
Tuesday, June 9. Thirty-two AmCit crewmembers are expected
to arrive on June 8. Tidewater anticipates Chevron will
conclude its contract for the boats on Monday, June 8 and
that its agent will submit the export paperwork on the boats
on June 9. (NOTE: The GBRV has instructed all Customs
officials to secure PDVSA approval on any oil-sector
equipment export requests submitted by expropriated oil
services companies (including Tidewater) prior to releasing
the equipment.) Chevron employed Tidewater's boats to
support its exploration drilling program in the Cardon III
Block in the Gulf of Venezuela that utilized the
Liberian-flagged ENSCO-68 jack-up drilling rig. During a
phone conversation with Jakobs on June 7, PetAtt learned that
the schedule could slip to later in the week as Chevron is
having difficulties transferring the rig to Spain's Repsol
which has a follow-on contract for the Ensco rig to drill a
well in the Cardon IV Block. (NOTE: Kehoe and Jakobs plan to
keep Embassy PetAtt informed of the situation in case the
GBRV obstructs removal of the two U.S.-flagged vessels. They
will inform the Embassy of any GBRV actions prior to seeking
Washington's assistance. END NOTE)


2. (C) During the June 4 meeting, Jakobs took a phone call
from an unnamed PetroSucre manager who stated the PDVSA-led
joint venture (with Italy's ENI and Taiwan's OPIC as minority
partners) would pay 1.8 million Bolivars the week of June 8
for labor and support costs owed on the Tidewater contract.
Jakobs told PetAtt one quarter of that sum would bring it
current on labor costs and the rest would help Tidewater
pay-off outstanding expenses to sub-contractors and
suppliers. On June 7, Jakobs told PetAtt that PetroSucre
management delivered a letter to Tidewater on June 5
requesting a three-month contract extension for the four
non-U.S. flagged Tidewater oil support vessels currently
servicing the Liberian-flagged ENSCO-69 drill rig in
PetroSucre. Jakobs expects Tidewater will press to receive
the outstanding $14 million owed on that contract as a
pre-condition to extending it. He also acknowledged that it
is likely given recent GBRV and PDVSA actions that the
vessels could simply be seized by PDVSA.


3. (C) The regional manager for a large U.S. IOC told PetAtt
on May 28 that he had heard there was a significant fire on
ENSCO-69. Jakobs confirmed that a fire severely damaged
ENSCO-69 and it has minimal electrical capacity. Jakobs
believes that if Ensco assists PetroSucre in repairing the
rig, it could be back on-line within a month. Without
Ensco's assistance, it will take much longer to repair the
drill rig.


4. (C) COMMENT: Washington should be prepared for the
possible seizure of Tidewater's vessels in PetroSucre and to
the GBRV erecting obstacles to the removal of the two
U.S.-flagged vessels from Cardon III. END COMMENT.
CAULFIELD