Advertisement
Not a member of Pastebin yet?
Sign Up,
it unlocks many cool features!
- SENSITIVE
- SIPDIS
- ENERGY FOR CDAY AND ALOCKWOOD
- NSC FOR JSHRIER
- E.O. 12958: DECL: 01/28/2018
- TAGS: EPET, ENRG, EINV, ECON, VE
- SUBJECT: STATOIL: MIXED VIEWS ON INVESTMENT CLIMATE
- REF: A. 2007 CARACAS 1822
- B. CARACAS 108
- Classified By: Acting Economic Counselor Shawn E. Flatt for Reason 1.4
- (D)
- 1. (C) SUMMARY: Norway\'s StatoilHydro received a far more
- lucrative compensation package for its lost equity in the
- former Sincor strategic association than reported in the
- press. The BRV and PDVSA have taken a number of steps to
- increase oil companies\' confidence in Venezuela\'s investment
- climate. However, President Chavez\' recent comments
- regarding a windfall profits tax has erased many of the
- positive gains. Statoil is expecting a relative smooth
- maintenance shutdown for Petrocedeno\'s upgrader (the former
- Sincor). It appears that the BRV will look for an outsider
- to replace Vice Minister Bernard Mommer. END SUMMARY
- --------------------------------------------- --------
- MEDIA REPORTS ARE INCORRECT ON STATOIL\'s COMPENSATION
- --------------------------------------------- --------
- 2. (C) Petroleum Attache (Petatt) met with Statoil Venezuela
- President Thore Kristiansen (strictly protect throughout) on
- February 26 to discuss Statoil\'s views on the current
- investment climate. Petatt began the meeting by
- congratulating Kristiansen on the recent signing of two
- agreements to quantify the reserves of the block Junin 10 in
- the Faja as well as carry out a development study for the
- block and PDVSA\'s payment of compensation to Statoil for its
- lost equity in the former Sincor strategic association. Dow
- Jones Newswires reported on February 14 that Statoil received
- USD 130 million in compensation for the 5.3% equity stake
- that it lost when the Sincor strategic association was
- forcibly converted into the Petrocedeno joint venture.
- 3. (C) Kristiansen stated Statoil was very pleased with the
- compensation that it received for its lost equity and added
- that it was significantly higher than \"what the Wall Street
- Journal reported\". He reminded Petatt that he has repeatedly
- stated that Statoil had received a good deal (Reftel A).
- Although Kristiansen declined to provide details on the
- compensation package, he noted that PDVSA had five months to
- pay Statoil. Kristiansen has previously mentioned that the
- compensation package involved a cash payment with an option
- to be paid in crude oil (Reftel A). Kristiansen also added
- the deal has caused some problems for Statoil\'s board.
- Statoil has a policy of trying to be as transparent as
- possible with its shareholders. Although the board is
- convinced the deal is an excellent one for the company, it
- did not believe that it could release details of it to the
- shareholders due to BRV sensitivities.
- --------------------------------------------- ------------
- BRV AND PDVSA SEND POSITIVE SIGNALS TO THE PRIVATE SECTOR
- --------------------------------------------- ------------
- 4. (C) When asked about Statoil\'s views on the investment
- climate in Venezuela, Kristiansen stated they were generally
- positive. He pointed to three pieces of evidence to justify
- Statoil\'s optimism. First, Kristiansen stated PDVSA is quite
- serious about raising production and understands that the
- private sector will play a key role in raising overall
- production (Reftel B). Kristiansen said he was actually
- worried that PDVSA was too keen to raise crude production.
- He expressed concern that PDVSA would try to raise production
- levels so quickly that it ended up damaging reservoirs.
- Kristiansen told the Ambassador during a courtesy call on
- November 30 that PDVSA had approached both Total and Statoil
- to increase production at Petrocedeno by 200,000 barrels per
- day to 400,000 barrels.
- CARACAS 00000264 002 OF 003
- 5. (C) Kristiansen added that PDVSA has stated that it will
- begin assigning blocks in the Faja for development in the
- next few weeks. He then noted that \"a few weeks\" in
- Venezuela could actually end up being \"a few months\". During
- his courtesy call on the Ambassador in November, Kristiansen
- described the BRV as being \"strongly\" interested in expansion
- in the Faja. At the time, he stated his belief that the
- necessary resources and technology were available for
- expansion. He repeated the statement to Petatt but noted the
- number of private sector companies that could partner with
- PDVSA was limited. (NOTE: During the November meeting,
- Kristiansen said Sincor originally cost USD 4.2 billion to
- construct and that to duplicate it in today\'s market would
- cost USD 7 to 8 billion. The cost would climb to USD 10-11
- billion if PDVSA insisted on a 20% recovery rate. He
- estimated that it would take 6 to 10 years from the date the
- partners received a license for the upgrader to enter into
- production. END NOTE)
- 6. (C) Kristiansen stated Statoil is also optimistic due to
- PDVSA\'s general approach to the Petrocedeno maintenance
- shutdown. Petrocedeno\'s upgrader shut down at midnight on
- February 25 for maintenance. The shutdown is scheduled to
- last 45 days. Petrocedeno\'s fields will continue producing
- extra heavy crude oil that will then be mixed with lighter
- crudes for marketing. PDVSA will provide the lighter crudes.
- Kristiansen stated PDVSA officials initially ignored
- requests for information regarding the supply of light
- crudes. However, this quickly changed and they are now
- promising significantly more crude than Statoil originally
- anticipated. Kristiansen did not provide details but said
- Statoil believes Petrocedeno\'s field production will stay
- above 100,000 barrels per day during the maintenance shutdown.
- 7. (C) The final piece of evidence that justifies Statoil\'s
- optimism is the recent performance of senior PDVSA executives
- at an extra heavy oil conference held in Maturin the week of
- February 11. Unlike other conferences, all of the scheduled
- PDVSA speakers showed up and gave presentations that actually
- contained details. Kristiansen stated it was clear that
- PDVSA\'s senior management is clearly wrestling with the best
- way to develop the Faja. In addition, PDVSA speakers
- consistently stressed the need for private sector
- participation.
- ---------------------------
- NOT ALL SWEETNESS AND LIGHT
- ---------------------------
- 8. (C) When Petatt opined that the BRV was sending mixed
- signals and pointed to President Chavez\' recent suggestion
- for a windfall profits tax, Kristiansen agreed. (NOTE:
- Chavez announced on February 17 that his administration was
- considering the imposition of a windfall profits tax on the
- oil industry. He did not provide details on the proposal.
- END NOTE).
- 9. (C) Kristiansen described the proposal as ridiculous and
- claimed the BRV\'s current take, based on PDVSA\'s equity stake
- in the joint ventures and the current tax and royalty rates,
- was 86.7%. As a result, Chavez had little justification for
- his claim that the oil companies were earning excessive
- profits. He said Chavez\' comments were useful due to the
- fact that he \"let the cat out of the closet\". Since Chavez
- did not provide any specifics on his proposed tax, his
- comments raised the level of risk for companies operating in
- Venezuela. According to Kristiansen, Statoil will merely
- require a higher rate of return on Venezuela projects due to
- the increased risk of ambiguous fiscal terms.
- CARACAS 00000264 003 OF 003
- --------------------
- MOMMER\'S REPLACEMENT
- --------------------
- 10. (C) Rumors have been swirling for months that Energy Vice
- Minister Bernard Mommer will be retiring shortly. Several
- Embassy contacts have speculated that Mommer\'s replacement
- will be Dr. Ivan Orellana, the Energy Ministry\'s
- International Affairs Director and Venezuela\'s OPEC governor.
- Orellana has a reputation for being a radical Chavez
- supporter.
- 11. (C) Kristiansen, who has an excellent working
- relationship with Mommer due in part to the fact they are
- both German speakers, told Petatt that he has raised the
- rumors directly with Mommer. According to Kristiansen,
- Mommer stated the BRV is looking for an outside candidate to
- replace him rather than a current Energy Ministry or PDVSA
- official. Mommer stated the ideal candidate would have
- strong administrative skills and would solve problems for
- Energy Minister Ramirez rather than create them. Kristiansen
- said he firmly believes Mommer will continue to have a strong
- policy role after his retirement.
- DUDDY
- "
- "143552","2/28/2008 18:25","08BRIDGETOWN124","Embassy Bridgetown","CONFIDENTIAL","","VZCZCXYZ0002
- PP RUEHWEB
- DE RUEHWN #0124/01 0591825
- ZNY CCCCC ZZH
- P 281825Z FEB 08
- FM AMEMBASSY BRIDGETOWN
- TO RUEHC/SECSTATE WASHDC PRIORITY 6146
- INFO RUCNCOM/EC CARICOM COLLECTIVE PRIORITY
- RUEHCV/AMEMBASSY CARACAS PRIORITY 1877
- RUEHUB/USINT HAVANA PRIORITY 0108
- RHMFISS/DEPT OF HOMELAND SECURITY WASHINGTON DC PRIORITY
- RUEHC/SECSTATE WASHDC PRIORITY 6147
- RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
- RUMIAAA/HQ USSOUTHCOM J2 MIAMI FL PRIORITY
- RUMIAAA/HQ USSOUTHCOM J5 MIAMI FL PRIORITY
- RUEHCV/USDAO CARACAS VE PRIORITY
- ","C O N F I D E N T I A L BRIDGETOWN 000124
Advertisement
Add Comment
Please, Sign In to add comment
Advertisement