PDVSA's Fadi Kabboul: "China had only paid $5/barrel of crude"

    English

    US embassy cable - 10CARACAS233

    VENEZUELA: PDVSA Director for Strategic Planning Alleges it is Open for Dialogue with U.S.

    Identifier: 10CARACAS233
    Origin: Embassy Caracas
    Created: 2010-02-26 13:31:00
    Classification:  
    Tags: EPET EINV ENRG ECON VE  
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    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 
     
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    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 Alleges it 
    is Open for Dialogue with U.S. 
     
    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, asserted PDVSA\'s openness to
    dialogue with the USG, and expressed interest in the
    US Geological Survey\'s survey on recoverable oil
    in the Orinoco Belt that effectively doubled Venezuela\'s estimated reserves, and the on-going debate regarding Venezuela\'s production numbers. He noted current Chinese difficulties in operating in Venezuela. He also shared that the Washington-based Venezuelan Energy Counselor had returned recently to Caracas to direct the planning staff of the newly formed Electricity Ministry. END SUMMARY.
    2. (C) PETROLEUM RELATIONS: Petroleum AttachC) (PetAtt) spoke with
    Fadi Kabboul (Director of PDVSA) on February 18 when he was
    identified on the visa line by an alert Consular Officer. [NOTE:
    This message should be read in the context of Refs A and B that
    provide a counterbalance to Kabboul\'s forward leaning assessment of
    the U.S. relationship and on Venezuela\'s production figures. END
    NOTE] Kabboul shared that his brother George Kabboul, President of
    PDVSA subsidiary PDV Marina, had been concerned following his
    recent invitation to PetAtt to visit his office (Ref A) and had
    contacted his brother to inquire whether 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 asked whether PetAtt remembered PDVSA
    Executive Vice President Eulogio del Pino\'s verbal invitation to
    PetAtt offered on the margins of the World Heavy Oil Congress in
    November 2009 to call his office and arrange for a meeting. [NOTE:
    Fadi Kabboul offered a revisionist view of history. He has never
    offered a meeting or claimed to be \"in charge\" of the U.S.
    petroleum relationship. Nor did del Pino offer PetAtt a meeting.
    END NOTE] Kabboul also stated his understanding that Venezuelan
    Ambassador to the U.S. Bernardo Alvarez was supposed to have a
    discussion with the Ambassador concerning the expired U.S. -
    Venezuelan MOU on Energy Cooperation. [NOTE: Following inquiries
    from the Venezuelan Embassy and PDVSA directors in Caracas, Post
    submitted a diplomatic note (Ref C) to the GBRV in September 2009
    agreeing to discuss the GBRV interest in resurrecting the MOU. The
    GBRV has not responded to the diplomatic note. END NOTE]

    3. (C) Kabboul stated that he would travel to Washington, DC the
    week of March 1 to participate in the Energy Council\'s private
    meetings, including a Western Hemisphere Energy Roundtable on March
    4. [NOTE: Subsequent to this meeting with Kabboul, the Ambassador
    agreed to address this private gathering of state legislators. END
    NOTE.] Kabboul said that Minister Ramirez instructed him to meet
    with the U.S. Department of the Interior\'s U.S. Geological Survey
    regarding a report it published in February titled \"An Estimate of
    Recoverable Heavy Oil Resources of the Orinoco Oil Belt,
    Venezuela.\" The technical report essentially doubled the estimate
    of recoverable heavy oil in Venezuela\'s Orinoco belt. Kabboul
    claimed he has a meeting scheduled with the principal drafter,
    Christopher Schenk, of the report and is primarily interested in
    discussing the USGS decision to use a recovery factor of 40% in the
    report. [NOTE: Post contacted USGS and confirmed that it had not
    been approached by the GBRV or PDVSA regarding a possible meeting
    to discuss the report. USGS agreed to inform the Venezuela Desk if
    the Venezuelan Embassy requests a meeting. END NOTE.] He added
    that PDVSA is sending a technical delegation to visit Chevron\'s
    Bakersfield production field to understand better how Chevron has
    achieved a recovery rate of 70%. [NOTE: MENPET has used a 20%
    recovery rate in its negotiations with the IOCs. END NOTE]

    4. (C) OIL PRODUCTION: Kabboul claimed that MENPET\'s release of
    petroleum export documentation to British auditing company
    Inspectorate had settled the issue regarding PDVSA\'s production
    levels. He expressed a belief that any secondary sources that do
    not upwardly revise estimates of Venezuelan crude production are
    acting out of political motives and refusing to recognize the
    \"transparency\" the GBRV has brought to the issue. He said that
    domestic consumption is only 540,000 b/d. [NOTE: The majority of
    non-governmental estimates put Venezuelan domestic consumption
    above 700,000 b/d. END NOTE]

    5. (C) PDVSA ON CHINA AND RUSSIA: Kabboul stated that negotiations
    with CNPC to form a mixed petroleum production company in the Junin
    4 block of the Orinoco heavy oil belt had stalled and might be in
    jeopardy, but that negotiations with the Russian consortium for a
    project in Junin 6 were progressing. He claimed that the GBRV is
    extremely upset with Chinese companies due to the discrepancy
    between Chinese petroleum import statistics that suggest the PRC is
    profiting from Venezuelan oil purchases by diverting the crude to
    third markets and earning a sizable margin between the price the
    Chinese companies pay the GBRV and the price they receive on the
    open market for the same shipment. Kabboul intimated that tankers
    had been diverted to the U.S., Africa, and elsewhere in Asia.
    Furthermore, PDVSA had analyzed its crude sales to China and
    determined that China had only paid $5/barrel of crude on a couple
    of deals.

    6. (C) CHEVRON AND CARABOBO: Kabboul stated that according to an
    internal PDVSA study, Petroboscan (a PDVSA/Chevron mixed company)
    is the most profitable petroleum mixed company in Venezuela. He
    added that Chevron was the big winner in the Carabobo bid round and
    that Chevron President for Africa and Latin America Ali Moshiri \"is
    great.\" He expects Chevron and PDVSA will finalize a mixed company
    agreement by the March 24 deadline announced by President Chavez.

    7. (C) PETROLEUM COUNSELORS: Kabboul mentioned that Carlos
    Figueredo, the Petroleum Counselor in the Venezuelan Embassy in
    Washington, DC had returned to Caracas to take up a position as the
    head of planning in the new Ministry for Electricity. Figueredo
    has a long-standing close relationship with Electricity Minister
    (and former PDVSA CEO) Ali RodrC-guez). Kabboul stated that he is
    vetting potential replacements. [NOTE: Traditionally, the GBRV
    nominates a senior PDVSA executive to serve as its Energy Counselor
    in Washington, DC. Kabboul preceded Figueredo in that position.
    END NOTE]

    8. (C) COMMENT: Kabboul has proven to be a reliable interlocutor
    over the last couple of months on basic issues, responding
    privately to phone messages and e-mails. He has not demonstrated
    an ability to engage honestly in conversations of substance, but
    rather toes the party line. Offers of meetings with EmbOffs, while
    the GBRV disregards the official USG response to requests for
    dialogue on substantive energy issues with the Ambassador, are
    disingenuous. END COMMENT.
    DUDDY

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