Identifier
Created
Classification
Origin
09CARACAS891
2009-07-14 19:04:00
CONFIDENTIAL
Embassy Caracas
Cable title:
PDVSA EXPROPRIATES REMAINING TIDEWATER VESSELS
how-toVZCZCXRO7206 RR RUEHDE RUEHDH DE RUEHCV #0891 1951904 ZNY CCCCC ZZH R 141904Z JUL 09 FM AMEMBASSY CARACAS TO RUEHC/SECSTATE WASHDC 3381 INFO RUEHHH/OPEC COLLECTIVE RUEHAC/AMEMBASSY ASUNCION 1026 RUEHBO/AMEMBASSY BOGOTA 8022 RUEHBR/AMEMBASSY BRASILIA 6167 RUEHLP/AMEMBASSY LA PAZ 2919 RUEHPE/AMEMBASSY LIMA 1200 RUEHSP/AMEMBASSY PORT OF SPAIN 3741 RUEHQT/AMEMBASSY QUITO 3014 RUEHSG/AMEMBASSY SANTIAGO 4144 RUEHDG/AMEMBASSY SANTO DOMINGO 0672 RHEHNSC/NSC WASHDC RHEHAAA/WHITEHOUSE WASHDC RHEBAAA/DEPT OF ENERGY RUCPDOC/DEPT OF COMMERCE RUEATRS/DEPT OF TREASURY RUMIAAA/HQ USSOUTHCOM MIAMI FL
C O N F I D E N T I A L CARACAS 000891
SIPDIS
ENERGY FOR ALOCKWOOD AND LEINSTEIN, DOE/EIA FOR MCLINE
HQ SOUTHCOM ALSO FOR POLAD
TREASURY FOR RJARPE
COMMERCE FOR 4332/MAC/WH/JLAO
NSC FOR RKING
E.O. 12958: DECL: 07/13/2019
TAGS: EPET EINV ENRG ECON VE
SUBJECT: PDVSA EXPROPRIATES REMAINING TIDEWATER VESSELS
REF: A. CARACAS 581
B. CARACAS 592
C. CARACAS 707
Classified By: Economic Counselor Darnall Steuart, for reasons
1.4 (b) and (d).
C O N F I D E N T I A L CARACAS 000891
SIPDIS
ENERGY FOR ALOCKWOOD AND LEINSTEIN, DOE/EIA FOR MCLINE
HQ SOUTHCOM ALSO FOR POLAD
TREASURY FOR RJARPE
COMMERCE FOR 4332/MAC/WH/JLAO
NSC FOR RKING
E.O. 12958: DECL: 07/13/2019
TAGS: EPET EINV ENRG ECON VE
SUBJECT: PDVSA EXPROPRIATES REMAINING TIDEWATER VESSELS
REF: A. CARACAS 581
B. CARACAS 592
C. CARACAS 707
Classified By: Economic Counselor Darnall Steuart, for reasons
1.4 (b) and (d).
1. (C) Tidewater's remaining assets in Venezuela were
verbally expropriated the weekend of July 11-12. According
to Tidewater Country Representative, Mikael Jacob (strictly
protect throughout),the U.S. oil services company had four
boats supporting PDVSA's PetroSucre project (formerly
ConocoPhillips, Corocoro project) in the Gulf of Paria.
After PDVSA reneged on recent promises to pay outstanding
arrears, Tidewater threatened to cease operations. PDVSA
responded by seizing the vessels. As of July 13, only two of
the four boats were in service; one was in dry dock and one
was temporarily out of service. Other non-Venezuelan
Tidewater entities bare-boat chartered the four vessels to
Tidewater's Venezuela subsidiary, Semarca. The service craft
are dual-flagged in Venezuela (temporary) and Vanuatu
(permanent).
2. (C) Jacob believes PDVSA will attempt to extend the May 8
Ministry of Energy and Petroleum expropriation resolution
which named Tidewater/Semarca to include these assets.
(NOTE: The resolution is unclear whether it relates to
Semarca's Lake Maracaibo assets or all of Semarca's assets in
Venezuela. END NOTE) If the PetroSucre expropriation is
retroactive to May 7, PDVSA likely will deny any costs
associated with the vessels incurred by Tidewater/Semarca
over the last month. PDVSA has not yet made a compensation
offer to Tidewater for any of the expropriated assets.
According to Jacob, with the remainder of its Venezuelan
assets now expropriated, Tidewater is likely to file an
international arbitration claim against the GBRV in the near
future. According to Jacob, PDVSA owes $12 million in
arrears to Tidewater for the PetroSucre project. A rough
estimate of the fair market value for the boats is $7-10
million. This must now be added to the value of the
Tidewater/Semarca Maracaibo base and the eleven boats
expropriated in western Venezuela, roughly estimated at $15
million. At the time of the Lake Maracaibo expropriation,
PDVSA owed Tidewater $35 million in arrears for the
PetroSucre and Lake Maracaibo contracts combined.
3. (C) COMMENT: PDVSA reacted quickly to Tidewater's threat
to cease operations and may have acted before its lawyers had
the opportunity to design a legal strategy for the
expropriation. Furthermore, it is unlikely PDVSA realizes it
expropriated boats that do not belong to Semarca, but rather,
were chartered from other foreign Tidewater companies.
Nevertheless, all of Tidewater's assets in Venezuela have
been expropriated. Tidewater probably expected this reaction
when it threatened to cease operations and might have
designed this situation to clear the way for its
international arbitration claim. END COMMENT.
CAULFIELD
SIPDIS
ENERGY FOR ALOCKWOOD AND LEINSTEIN, DOE/EIA FOR MCLINE
HQ SOUTHCOM ALSO FOR POLAD
TREASURY FOR RJARPE
COMMERCE FOR 4332/MAC/WH/JLAO
NSC FOR RKING
E.O. 12958: DECL: 07/13/2019
TAGS: EPET EINV ENRG ECON VE
SUBJECT: PDVSA EXPROPRIATES REMAINING TIDEWATER VESSELS
REF: A. CARACAS 581
B. CARACAS 592
C. CARACAS 707
Classified By: Economic Counselor Darnall Steuart, for reasons
1.4 (b) and (d).
1. (C) Tidewater's remaining assets in Venezuela were
verbally expropriated the weekend of July 11-12. According
to Tidewater Country Representative, Mikael Jacob (strictly
protect throughout),the U.S. oil services company had four
boats supporting PDVSA's PetroSucre project (formerly
ConocoPhillips, Corocoro project) in the Gulf of Paria.
After PDVSA reneged on recent promises to pay outstanding
arrears, Tidewater threatened to cease operations. PDVSA
responded by seizing the vessels. As of July 13, only two of
the four boats were in service; one was in dry dock and one
was temporarily out of service. Other non-Venezuelan
Tidewater entities bare-boat chartered the four vessels to
Tidewater's Venezuela subsidiary, Semarca. The service craft
are dual-flagged in Venezuela (temporary) and Vanuatu
(permanent).
2. (C) Jacob believes PDVSA will attempt to extend the May 8
Ministry of Energy and Petroleum expropriation resolution
which named Tidewater/Semarca to include these assets.
(NOTE: The resolution is unclear whether it relates to
Semarca's Lake Maracaibo assets or all of Semarca's assets in
Venezuela. END NOTE) If the PetroSucre expropriation is
retroactive to May 7, PDVSA likely will deny any costs
associated with the vessels incurred by Tidewater/Semarca
over the last month. PDVSA has not yet made a compensation
offer to Tidewater for any of the expropriated assets.
According to Jacob, with the remainder of its Venezuelan
assets now expropriated, Tidewater is likely to file an
international arbitration claim against the GBRV in the near
future. According to Jacob, PDVSA owes $12 million in
arrears to Tidewater for the PetroSucre project. A rough
estimate of the fair market value for the boats is $7-10
million. This must now be added to the value of the
Tidewater/Semarca Maracaibo base and the eleven boats
expropriated in western Venezuela, roughly estimated at $15
million. At the time of the Lake Maracaibo expropriation,
PDVSA owed Tidewater $35 million in arrears for the
PetroSucre and Lake Maracaibo contracts combined.
3. (C) COMMENT: PDVSA reacted quickly to Tidewater's threat
to cease operations and may have acted before its lawyers had
the opportunity to design a legal strategy for the
expropriation. Furthermore, it is unlikely PDVSA realizes it
expropriated boats that do not belong to Semarca, but rather,
were chartered from other foreign Tidewater companies.
Nevertheless, all of Tidewater's assets in Venezuela have
been expropriated. Tidewater probably expected this reaction
when it threatened to cease operations and might have
designed this situation to clear the way for its
international arbitration claim. END COMMENT.
CAULFIELD