. (C) SUMMARY: Fadi Kabboul, member of PDVSA
board, stated PDVSA’s willingness to
engage in dialogue with the United States Government and expressed interest in the
U.S. Geological Survey’s survey on recoverable oil
in the Orinoco Belt, which effectively doubled Venezuela’s estimated reserves, and the ongoing debate regarding Venezuela’s production figures. He noted the current challenges facing China in operating in Venezuela. He also mentioned that the Energy Counselor of Venezuela, based in Washington, had recently returned to Caracas to lead the planning staff of the newly formed Ministry of Electricity. END OF SUMMARY.
2. (C) OIL RELATIONS: Petroleum AttachC) (PetAtt) spoke with
Fadi Kabboul (PDVSA Director) on February 18 while he was
identified on the visa line by an alert Consular Officer. [NOTE:
This message should be read in the context of references A and B that
provide a counterweight to Kabboul’s progressive assessment of
the relationship with the United States and Venezuela’s production figures. END
NOTE] Kabboul shared that his brother George Kabboul, president of
PDV Marina, a subsidiary of PDVSA, had expressed concern after his
recent invitation to PetAtt to visit his office (Ref A) and had
contacted his brother to ask if he might be “in trouble.”
Fadi Kabboul told PetAtt that his door is “always open,” that
“he manages the oil relationship with the U.S.” and that “we should obtain
together.” Kabboul then asked if PetAtt remembered PDVSA’s
verbal invitation from Executive Vice President Eulogio del Pino to
PetAtt offered on the sidelines of the World Heavy Oil Congress in
November 2009 to call his office and arrange a meeting. [NOTE:
Fadi Kabboul provided a revisionist view of history. He has never
offered a meeting or claimed to be “in charge” of the U.S.
oil relationship. Del Pino also did not offer a meeting to PetAtt.
FINAL NOTE] Kabboul also expressed his understanding that the Venezuelan
ambassador in the United States, Bernardo Álvarez, was supposed to have a
discussion with the Ambassador about the expiry of the U.S. –
Venezuela MOU on Energy Cooperation. [NOTE: Subsequent consultations
from the Venezuelan Embassy and PDVSA executives in Caracas, Post
sent a diplomatic note (Ref C) to GBRV in September 2009
agreeing to discuss GBRV’s interest in reviving the MOU. The
GBRV has not responded to the diplomatic note. FINAL NOTE]
3. (C) Kabboul stated that he would travel to Washington, DC the
week of March 1 to participate in the private Energy Council
meetings, including a Western Hemisphere Energy Roundtable on March
4. [NOTE: After this meeting with Kabboul, the Ambassador
agreed to address this private meeting of state legislators. END
NOTE.] Kabboul said that Minister Ramírez had instructed him to meet
with the U.S. Geological Survey of the Department of the Interior
regarding a report published in February titled “An Estimate of
Recoverable Heavy Oil Resources from the Orinoco Oil Belt,
Venezuela.” The technical report essentially doubled the estimation
of recoverable heavy crude in Venezuela’s Orinoco Belt. Kabboul
asserted that he has a meeting scheduled with the lead author,
Christopher Schenk, of the report and is mainly interested in
discussing the USGS’s decision to use a 40% recovery factor in the
report. [NOTE: Post contacted USGS and confirmed they had not
been approached by GBRV or PDVSA regarding a possible meeting
to discuss the report. USGS agreed to inform Venezuela Desk if
the Venezuelan Embassy requests a meeting. FINAL NOTE.] He added
that PDVSA will send a technical delegation to visit Chevron’s
Bakersfield production field to better understand how Chevron has
achieved a 70% recovery rate. [NOTE: MENPET has used a 20%
recovery rate in its negotiations with IOC. FINAL NOTE]
4. (C) OIL PRODUCTION: Kabboul claimed that MENPET’s release of
export documentation to the British auditing company
Inspectorate resolved the issue of PDVSA’s production
levels. He expressed his belief that any secondary source that does
not revise Venezuelan crude production estimates upwards is
acting for political reasons and refusing to recognize the
“transparency” that the GBRV has brought to the issue. He said that
domestic consumption is only 540,000 b/d. [NOTE: Most of
the non-governmental estimates place Venezuelan internal consumption
above 700,000 b/d. FINAL NOTE]
5. (C) PDVSA ON CHINA AND RUSSIA: Kabboul stated that negotiations
with CNPC to form a joint production venture in the Junin
4 block of the Orinoco heavy oil belt had stalled and may be at
risk, but that negotiations with the Russian consortium for a
project in Junin 6 were progressing. He asserted that the GBRV is
extremely upset with Chinese companies due to the discrepancy
between Chinese oil import statistics suggesting that the People’s Republic of China is
profiting from Venezuelan oil purchases by diverting crude to
third markets and earning a significant margin between the price that
Chinese companies pay the GBRV and the price they receive in the
open market for the same shipment. Kabboul hinted that tankers
had been diverted to the U.S., Africa, and other parts of Asia.
Additionally, PDVSA had analyzed its crude sales to China and
determined that China had only paid $5 per barrel of crude in a couple
of deals.
6. (C) CHEVRON AND CARABOBO: Kabboul stated that according to an
internal study by PDVSA, Petroboscan (a PDVSA/Chevron joint venture)
is the most profitable joint oil company in Venezuela. He
added that Chevron was the big winner in the Carabobo bidding round and
that Chevron’s president for Africa and Latin America, Ali Moshiri, “is
great.” He hopes that Chevron and PDVSA will finalize a joint
venture agreement before the March 24 deadline announced by President Chávez.
7. (C) ADVISORS ON OIL: Kabboul mentioned that Carlos
Figueredo, Oil Counselor at the Venezuelan Embassy in
Washington, DC, had returned to Caracas to take a position as the
head of planning in the new Ministry of Electricity. Figueredo
has a long-standing close relationship with the Minister of Electricity
(and former PDVSA executive) Ali RodrC-guez. Kabboul stated that he is
examining potential replacements. [NOTE: Traditionally, the GBRV
appoints a senior PDVSA executive to serve as its Energy Counselor
in Washington, D.C. Kabboul preceded Figueredo in that position.
FINAL NOTE]
8. (C) COMMENTARY: Kabboul has proven to be a reliable interlocutor
in recent months on basic issues, responding
privately to phone messages and emails. He has not demonstrated
the ability to participate honestly in important conversations but
rather follows the party line. Offers for meetings with EmbOffs, while
the GBRV ignores the official U.S. government response to requests for
dialogue on substantive energy issues with the Ambassador, are
false. END OF COMMENT.
DUDDY