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- SIPDIS
- ENERGY FOR CDAY AND ALOCKWOOD
- NSC FOR JCARDENAS AND JSHRIER
- E.O. 12958: DECL: 01/12/2017
- TAGS: EPET, ENRG, EINV, ECON, VE
- SUBJECT: SINCOR\'S ROCKY TRANSITION TO PETROCEDENO
- REF: A. CARACAS 1481
- B. CARACAS 1314
- Classified By: Economic Counselor Andrew N. Bowen for Reason 1.4 (D)
- 1. (C) SUMMARY: Strategic association Sincor\'s transition to
- Petrocedeno, a PDVSA-controlled joint venture, has been
- fraught with labor problems. Labor union members have
- blocked the road to the upgrader 33 days so far this year.
- Approximately 100 employees have quit their jobs. A work
- plan is in place with several major projects. PDVSA has
- tried to cover up accidents and may be hiding information
- from its partners. END SUMMARY
- ---------------------------
- A SOMEWHAT ROCKY TRANSITION
- ---------------------------
- 2. (C) Petroleum Attache met with Sincor Deputy General
- Manager Jane Nagy (strictly protect throughout) on August 20
- to discuss Sincor\'s migration from strategic association to a
- PDVSA-controlled joint venture, Petrocedeno. Sincor is one
- of four strategic associations in the Faja. Nagy is an
- employee of Statoil, the Norwegian state oil company, which
- seconded her to Sincor. Statoil will have a 9.677% stake in
- the Petrocedeno joint venture. PDVSA will control 60% of the
- joint venture and the French oil company Total will hold the
- remaining shares. Nagy sits on the transition committee
- tasked with handling all of the major issues arising from the
- migration. She began by noting that Sincor has had several
- labor-related problems. She stated labor union members,
- upset over the fact that they do not have a collective
- contract, have blocked the road to the Sincor upgrader 33
- days so far this year. The blockages have kept employees
- from arriving at work and had a disruptive effect on
- operations.
- 3. (C) In addition to the protests, approximately 100
- employees have resigned their positions following the
- announcement that Sincor would migrate to a PDVSA-controlled
- joint venture. Nagy stated 80% of the departing employees
- had six to twenty years experience. Among the departing
- employees were senior engineers and technicians. Nagy stated
- the Faja is full of headhunters who are hoping to pick up
- experiences employees. She stated almost all of the
- departing employees are looking for overseas positions. When
- asked if Sincor employees had received their new Petrocedeno
- compensation package, Nagy replied that they were still
- waiting to receive it. (COMMENT: As reported in Reftel A,
- compensation packages at other strategic associations have
- contained pay cuts of over 30 percent. We expect the
- packages that Sincor employees receive to contain similar
- cuts. END COMMENT)
- 4. (C) Nagy also stated the recent firing of four new
- employees was the most difficult situation she has had to
- face in her career. The employees, recent graduates who were
- recruited for a prestigious training program, were fired due
- to their political leanings. The opposition newspaper Tal
- Cual interviewed some of the fired employees and printed a
- large story with plenty of details. Nagy said Sincor
- employees placed considerable pressure on her to do something
- about the situation but there was little that she could do.
- She stated PDVSA\'s actions in the case and labor policies in
- general were the subject of an acrimonious transition
- committee meeting. She stated she never received minutes
- from the meeting and it is not clear if PDVSA will ever pass
- them to Total and Statoil, its two private sector partners.
- ------------------
- ON THE BRIGHT SIDE
- CARACAS 00001655 002 OF 002
- ------------------
- 5. (C) On the positive side, Nagy stated Sincor\'s work plan
- is in place and includes major improvements in upstream
- facilities. In addition, the Sincor upgrader is scheduled
- for major maintenance shutdown in February 2008. Sincor will
- also go ahead with an enhanced recovery pilot project. Nagy
- stated it is not clear at this point if Sincor will carry out
- a major debottlenecking project in the near future.
- 6. (C) Nagy also confirmed that Sincor\'s block size will
- remain the same after the migration to the joint venture.
- Senior BRV officials repeatedly stated during the migration
- negotiations that they would reduce the size of the strategic
- associations\' blocks. Nagy added that Statoil retained
- control of marketing in the new joint venture. (COMMENT:
- Chevron also stated that the block size in the Hamaca
- strategic association was not reduced as a result of the
- migration and that Chevron retained control of marketing
- (Reftel B). END COMMENT).
- --------------------------
- PDVSA PLAYS FAST AND LOOSE
- --------------------------
- 7. (C) Nagy complained that PDVSA tries to hide accidents
- and other negative information from the outside world. She
- stated Sincor recently had an accident at one of its wells.
- She stated the accident was not a blowout but rather an
- overflow. Although the accident was not major in nature,
- Nagy stated she promptly reported it to Statoil\'s
- headquarters. However, she stated PDVSA did not want to
- acknowledge the accident on the grounds that it was not that
- serious. She attributed PDVSA\'s attitude to a desire to keep
- down accident statistics. Nagy added she was concerned that
- PDVSA was hiding information from its private sector partners.
- -----------------------------------
- PORT FACILITIES ARE A MAJOR CONCERN
- -----------------------------------
- 8. (C) Nagy ended the meeting by opining that the USG should
- keep its eye on Venezuela\'s port facilities. She claimed the
- BRV has not spent any money on port facilities or carried out
- basic maintenance in years. She stated one of Sincor\'s
- berths is inoperable. As a result, Sincor may have to reduce
- production in the next several weeks due to problems shipping
- its production.
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