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Cablegate: Nicaragua - Venezuela Energy Sector Cooperation

VZCZCXYZ0002
RR RUEHWEB

DE RUEHMU #0645/01 0682332
ZNR UUUUU ZZH
R 092332Z MAR 07
FM AMEMBASSY MANAGUA
TO RUEHC/SECSTATE WASHDC 9418
INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE
RUEHCV/AMEMBASSY CARACAS 1009
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RHEBAAA/DEPT OF ENERGY WASHINGTON DC

UNCLAS MANAGUA 000645

SIPDIS

SENSITIVE
SIPDIS

STATE FOR WHA/CEN, WHA/EPSC, EEB/ESC

E.O. 12958: N/A
TAGS: ENRG EPET EAID MCC NU VE
SUBJECT: NICARAGUA - VENEZUELA ENERGY SECTOR COOPERATION
AGREEMENT

REF: A. MANAGUA 0639
B. MANAGUA 0640

1. (SBU) Summary. As part of a series of Bolivarian
Alternative agreements between Nicaragua and Venezuela signed
on January 11, 2007, respective Ministers of Foreign
Relations also signed an Energy Sector Cooperation Agreement.
The agreement sets out general areas for cooperation,
including the refining, distribution, supply, and marketing
of petroleum products. End Summary.

2. (SBU) The Energy Sector Cooperation Agreement was one of a
series of thirteen commitments with Venezuela negotiated by
the Ortega government before it came to power on January 10,
2007. Nicaraguan Minister of Foreign Relations Samuel Santos
and Venezuelan Minister of Foreign Relations Nicolas Maduro
Moros signed the agreement on January 11, 2007. The
substance of the agreement, along with the other commitments
made that day, was kept from the public for weeks. This
cable reports on an unsigned copy of this agreement.

Preambular Language
-------------------
3. (SBU) Preambular language stresses ties of friendship and
cooperation, and the role that the energy sector can play in
social development. Both countries pledge to collaborate on
the implementation of policies having to do with the
sovereign use of natural resources. The parties declare
their political will to pursue regional energy integration
within a framework where PETROCARIBE (a Venezuelan regional
energy initiative) can contribute to energy security,
socioeconomic development, and the transformation of society,
such that the quality of life is improved and people
participate in the determination and construction of their
own destiny. The principles of cooperation, complementarity,
self determination, solidarity, and respect for sovereignty
are enunciated.

Article 1: Objective
--------------------
4. (SBU) The objective of this agreement is to promote and
intensify bilateral energy cooperation through a broad and
sustained process of integration and cooperation in the
energy sector. The parties will work together to find ways
for oil, gas, and electricity to contribute to regional
development initiatives, particularly through PETROAMERICA
and PETROCARIBE. Regional energy policy will be coordinated
based on principles of equality, mutual respect of
sovereignty and reciprocal advantages, in accordance with
respective internal legislation foreseen by this agreement.

Article 2: Modalities
---------------------
5. (SBU) To accomplish political and commercial energy
integration, the parties will pursue the following activities:

-- strengthen energy relations between the two countries
through joint enterprises, service enterprises, and other
sectors of mutual interest;

-- create joint enterprises between Venezuelan Oil Company
(PDVSA) and state entities designated by the Government of
Nicaragua to develop projects for the refining, distribution,
supply, and marketing of petroleum products;

-- optimizing gasoline supply chains within the internal
market of Nicaragua;

-- supplying petroleum and refined products in quantities
agreed upon by the parties, and establishing payment
mechanisms;

-- evaluating projects for the construction of a transport
terminal for liquefied propane gas.

-- evaluating the possibility of the direct supply of gas to
Nicaragua via land, a transcaribbean gas pipeline, or sea, of
liquefied natural gas.

-- optimizing the infrastructure of distribution and supply
terminals of crude oil and petroleum products;

-- cooperating in the generation, transport, and distribution
of electrical power in Nicaragua;

-- cooperating in other ways that the parties mutually agree.


Article 3: Complementing Agreements
-----------------------------------
6. (SBU) To execute cooperation foreseen in this agreement,
the parties may adopt complementing agreements.

Article 4: Competent Entities
-----------------------------
7. (SBU) Competent authorities for this agreement are the
Nicaraguan National Energy Commission and the Venezuelan
Ministry of Energy and Petroleum. These entities may
delegate the execution of this agreement to respective state
enterprises, which may determine specific conditions required
for cooperation.

Article 5: Control and Follow Up
--------------------------------
8. (SBU) To assure prompt execution of this agreement,
competent authorities will meet on agreed dates alternatively
in each country, and establish executive working groups to
realize cooperation in different sectors.

Article 6: Utilization of Information
-------------------------------------
9. (SBU) Parties may freely utilize all information exchanged
under this agreement, except when one of the parties
establishes restrictions, or reserves the use or
distribution, or that which is classified as confidential.
In no case shall such information be transferred to a third
party without the written consent of the relevant party.

Article 7: Financing
--------------------
10. (SBU) Each party will pay for expenses resulting from
cooperative activities by their own competent authorities,
unless another modality is agreed upon in writing.

Article 8: Labor Relations
--------------------------
11. (SBU) Commissioned personnel by each party will continue
under the direction of the institution to which they belong,
and the laws, regulations, and standards of that institution.
Personnel may not dedicate themselves to any activity
outside their functions, nor may they receive remuneration
outside that which has been established, without prior
authorization from the competent authorities. Each of the
parties is responsible for labor accidents and damages to
their own property, independent of the place where it may
occur, unless it is a consequence of grave negligence or
hurtful conduct, in which case corresponding indemnities
should provide cover.

Article 9: Third Parties
------------------------
12. (SBU) This agreement does not preclude similar agreements
with third parties.

Article 10: Sovereignty
-----------------------
13. (SBU) Nothing in this agreement affects the sovereign
rights of Venezuela or Nicaragua over their natural resources.

Article 11: Termination and Modification
----------------------------------------
14. (SBU) This document may not be terminated or modified
without previous written consent by the other party.

Article 12: Disputes
--------------------
15. (SBU) Disputes will be resolved through friendly
diplomatic negotiations.

Article 13: Amendment
---------------------
16. (SBU) The agreement may be amended through common
agreement.

Article 14: Entry Into force, Duration, and Termination
--------------------------------------------- ----------
17. (SBU) The duration of the agreement is five years,
automatically renewed for consecutive periods of one year
unless one party notifies the other six months in advance of
its intention not to renew it. Either party may withdraw
from the agreement sixty days after having notified the other
party. Termination of the agreement does not imply the
termination of ongoing projects and programs agreed upon

during agreement, which shall continue until completed unless
the parties agree otherwise.
TRIVELLI

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