US Embassy Cable – 10CARACAS233
VENEZUELA: PDVSA Director for Strategic Planning Claims Openness to U.S. Dialogue
Identifier: 10CARACAS233
Origin: Embassy Caracas
Created: 2010-02-26 13:31:00
Classification:
Tags: EPET EINV ENRG ECON VE
VZCZCXRO4257
RR RUEHAO
DE RUEHCV #0233/01 0571331
ZNY CCCCC ZZH
R 261331Z FEB 10 ZFF3
FM AMEMBASSY CARACAS
TO RUEHC/SECSTATE WASHDC 0527
INFO OPEC COLLECTIVE
WESTERN HEMISPHERIC AFFAIRS DIPL POSTS
RHEBAAA/DEPT OF ENERGY WASHINGTON DC
RHEHAAA/NATIONAL SECURITY COUNCIL WASHINGTON DC
RHEHNSC/WHITE HOUSE NATIONAL SECURITY COUNCIL WASHINGTON DC
RHMFISS/HQ USSOUTHCOM MIAMI FL
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
C O N F I D E N T I A L SECTION 01 OF 02 CARACAS 000233
SIPDIS
ENERGY FOR ALOCKWOOD AND LEINSTEIN, DOE/EIA FOR MCLINE
HQ SOUTHCOM ALSO FOR POLAD
TREASURY FOR MKACZMAREK
COMMERCE FOR 4332/MAC/WH/JLAO
NSC FOR DRESTREPO, RCRANDALL AND LROSSELLO
OPIC FOR BSIMONEN-MORENO
AMEMBASSY BRASILIA PASS TO AMCONSUL RECIFE
AMEMBASSY OTTAWA PASS TO AMCONSUL QUEBEC
AMEMBASSY BRIDGETOWN PASS TO AMEMBASSY GRENADA
E.O. 12958: DECL: 2020/02/26
TAGS: EPET, EINV, ENRG, ECON, VE
SUBJECT: VENEZUELA: PDVSA Director for Strategic Planning Claims Openness to U.S. Dialogue
REF: 10 CARACAS 155; 09 CARACAS 1593; 09 STATE 99343
CLASSIFIED BY: Darnall Steuart, Economic Counselor, DOS, Econ;
REASON: 1.4(B), (D)
1. (C) SUMMARY: Fadi Kabboul, a member of PDVSA’s board of directors, emphasized PDVSA’s willingness to engage with the USG, expressing interest in the US Geological Survey’s findings on recoverable oil in the Orinoco Belt which effectively doubled Venezuela’s estimated reserves, in addition to the ongoing discourse surrounding Venezuela’s production figures. He noted that Chinese companies are currently facing challenges in operating within Venezuela. Furthermore, he mentioned that the Venezuelan Energy Counselor based in Washington had recently returned to Caracas to oversee the planning staff of the newly established Electricity Ministry. END SUMMARY.
2. (C) PETROLEUM RELATIONS: The Petroleum Attaché spoke with Fadi Kabboul on February 18 when he was identified on the visa line by a vigilant Consular Officer. [NOTE: This message should be interpreted alongside Refs A and B, which provide context to Kabboul’s optimistic assessment of the U.S. relationship and Venezuela’s production figures. END NOTE] Kabboul shared that his brother, George Kabboul, President of PDVSA subsidiary PDV Marina, had been concerned after inviting the PetAtt to his office (Ref A) and contacted him to ask if he might be ‘in trouble.’ Fadi Kabboul told PetAtt that his door is ‘always open,’ that he ‘manages the U.S. petroleum relationship,’ and that ‘we should get together.’ Kabboul then referenced a verbal invitation from PDVSA Executive Vice President Eulogio del Pino for PetAtt to arrange a meeting, although it was noted that Kabboul’s claims about such invitations are not entirely accurate. He mentioned that Venezuelan Ambassador to the U.S., Bernardo Alvarez, was expected to discuss the expired U.S. – Venezuelan MOU on Energy Cooperation. [NOTE: Following inquiries from the Venezuelan Embassy and PDVSA directors, Post submitted a diplomatic note (Ref C) to the GBRV in September 2009 to discuss their interest in reviving the MOU. The GBRV has yet to respond. END NOTE]
3. (C) Kabboul stated he would travel to Washington, DC during the week of March 1 to attend the Energy Council’s private meetings, which include a Western Hemisphere Energy Roundtable on March 4. [NOTE: After meeting with Kabboul, the Ambassador agreed to address this private gathering of state legislators. END NOTE.] Kabboul said Minister Ramirez directed him to meet with the U.S. Department of the Interior’s U.S. Geological Survey regarding a report published in February titled ‘An Estimate of Recoverable Heavy Oil Resources of the Orinoco Oil Belt, Venezuela.’ This technical report essentially doubled the recoverable heavy oil estimate in the Orinoco belt. He claimed to have a meeting lined up with the principal author, Christopher Schenk, to discuss the USGS’s decision to use a recovery factor of 40% in the report. [NOTE: Post reached out to USGS and confirmed that they had not been approached by the GBRV or PDVSA regarding a meeting to discuss the report. USGS agreed to inform the Venezuela Desk if a meeting is requested by the Venezuelan Embassy. END NOTE.] He added that PDVSA is sending a technical team to Chevron’s Bakersfield production field to learn how they achieve a recovery rate of 70%. [NOTE: MENPET has negotiated with a 20% recovery rate in dealings with IOCs. END NOTE]
4. (C) OIL PRODUCTION: Kabboul stated that MENPET’s release of petroleum export documentation to the British auditing firm Inspectorate addressed the concerns regarding PDVSA’s production levels. He expressed the belief that any other sources not revising estimates of Venezuelan crude production upwards are doing so for political reasons and are ignoring the ‘transparency’ that the GBRV has introduced to the discussion. He claimed that domestic consumption is only 540,000 b/d, whereas most independent estimates put domestic consumption above 700,000 b/d. END NOTE]
5. (C) PDVSA ON CHINA AND RUSSIA: Kabboul remarked that negotiations with CNPC to create a mixed petroleum production company in the Junin 4 block of the Orinoco heavy oil belt had stalled and may be in jeopardy; however, discussions with the Russian consortium regarding a project in Junin 6 are progressing. He suggested that the GBRV is quite displeased with Chinese companies due to discrepancies in Chinese petroleum import statistics, implying that these companies profit by diverting Venezuelan oil to third markets and obtaining a significant margin. Kabboul hinted at the diversion of tankers to the U.S., Africa, and other parts of Asia. Moreover, PDVSA’s analysis revealed that China had paid as low as $5/barrel on a few transactions.
6. (C) CHEVRON AND CARABOBO: According to an internal PDVSA study, Kabboul stated that Petroboscan (a joint PDVSA-Chevron company) is the most profitable mixed petroleum company in Venezuela. He noted that Chevron came out on top in the Carabobo bidding round and praised Chevron’s President for Africa and Latin America, Ali Moshiri, as ‘great.’ He anticipates that Chevron and PDVSA will finalize a mixed company agreement by the March 24 deadline set by President Chavez.
7. (C) PETROLEUM COUNSELORS: Kabboul mentioned that Carlos Figueredo, the Petroleum Counselor at the Venezuelan Embassy in Washington, DC, had returned to Caracas to head planning for the new Ministry for Electricity. Figueredo shares a longstanding close relationship with Electricity Minister (and former PDVSA CEO) Ali Rodríguez. Kabboul is currently vetting potential replacements. [NOTE: Historically, the GBRV nominates a senior PDVSA executive to serve as its Energy Counselor in Washington, DC. Kabboul served in that role before Figueredo. END NOTE]
8. (C) COMMENT: Kabboul has proven to be a reliable contact over recent months, responding to voicemails and emails promptly. However, he has not displayed the ability to engage authentically in substantial conversations and tends to align with the party line. Offers to meet with Embassy officials are largely insincere given the GBRV’s neglect of the formal U.S. government responses to requests for dialogue on significant energy issues. END COMMENT.
DUDDY