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Cablegate: Goh Sets July 1 Petrocaribe Deadline

VZCZCXRO6271
PP RUEHQU
DE RUEHPU #0830/01 1242123
ZNR UUUUU ZZH
P 042123Z MAY 07
FM AMEMBASSY PORT AU PRINCE
TO RUEHC/SECSTATE WASHDC PRIORITY 6011
INFO RUEHZH/HAITI COLLECTIVE PRIORITY
RUEHBR/AMEMBASSY BRASILIA PRIORITY 1526
RUEHSA/AMEMBASSY PRETORIA PRIORITY 1347
RUEHQU/AMCONSUL QUEBEC PRIORITY 0802
RHEHNSC/NSC WASHDC PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY

UNCLAS SECTION 01 OF 02 PORT AU PRINCE 000830

SIPDIS

SENSITIVE
SIPDIS

NSC FOR FISK
STATE FOR WHA/CAR
S/CRS
DRL
WHA/EPSC FOR FAITH CORNEILLE, ED MARTINEZ
EB/IFD
TREASURY FOR JEFFREY LEVINE
COMMERCE FOR SCOTT SMITH

E.O. 12958: N/A
TAGS: ENRG EPET ECON EAID HA
SUBJECT: GOH SETS JULY 1 PETROCARIBE DEADLINE

REF: A. PORT AU PRINCE 819

B. PORT AU PRINCE 522
C. PORT AU PRINCE 78
D. 06 PORT AU PRINCE 1905

PORT AU PR 00000830 001.2 OF 002


1. This message is sensitive but unclassified -- please
protect accordingly.

2. (SBU) Summary: ExxonMobil representatives, led by
Caribbean Sales Manager Bill Eisner, told Ambassador
Sanderson on April 26 that the head of Haiti's Petrocaribe
office, Michael Lecorps, gave the four oil companies
operating in Haiti until July 1 to sign the GoH contract on
Petrocaribe. ExxonMobil's final message to the GoH, based on
their overall industry experience and Petorcaribe's record in
the region, was that the contract should allow for some
percentage of fuel imported from suppliers other than
Venezuela's energy company, PDVSA. Eisner explained that the
GoH will buy the fuel from Venezuela and sell it to the oil
companies but expects the oil industry to otherwise
coordinate the supply, shipping and storage aspects of the
agreement directly with Venezuela. In various meetings,
Lecorps has told Poloff that revisions to the Petrocaribe
agreement signed by Haiti and Venezuela (refs A and B) have
not changed anything for him, and that the arrival of the
first Petrocaribe shipment will ''take time.'' End Summary.

3. (SBU) In a meeting with the Ambassador, Eisner and his
colleagues recounted their meeting with Lecorps and finance
ministry representatives on April 26. They all speculated
that the July 1 deadline will ''come and go,'' but they did
not voice their doubts to the GoH officials. Instead, Eisner
focused on his concerns about the price structure of the
agreement, the danger of relying on a single supplier, and
the transport complications that would result from
implementation of the agreement. Eisner and Lecorps also
discussed the Dominican Republic's Petrocaribe experience,
which has been a ''total disaster.'' In an earlier meeting,
Lecorps told Poloff he was aware of all the technical
difficulties, in terms of supply, transport and storage that
the Dominican Republic was having with Petrocaribe. However,
he later stated that the GoH had modified its contract with
Venezuela so that it would not have the same problems as the
Dominican Republic. (Note: When Venezuelan President Hugo
Chavez visited Haiti mid-March, Preval forced him to sign a
document allowing the oil companies to ship Petrocaribe
products free on board (FOB) to Haiti -- refs B and C)

4. (SBU) Eisner assured the GoH that ExxonMobil understands
that the financial benefits are attractive to Haiti. The
company is willing to work with the GoH to implement the
agreement, but not under the current proposal. (Note: The GoH
declared that Venezuela would supply 100 percent of Haiti's
energy needs in September, 2006 (ref D). End note.) The
current contract turns the Haitian government into
ExxonMobil's sole supplier, a responsibility the GoH is not
ready to handle, according to Eisner. Eisner noted that
Haiti would be the only Caribbean country to import 100
percent of the country's fuel demand through the Petrocaribe
agreement: Jamaica currently receives 25,000 of 70,000
barrels per day (b/d) and the Dominican Republic 50,000 of
150,000 b/d.

5. (SBU) Eisner said he was shocked when he realized that
Lecorps expected the oil industry to coordinate the
Petrocaribe deal on behalf of the GoH. According to Eisner,
the contract proposed by the GoH would make the oil industry
prisoner to two incompetent governments, negating much of the
industry's role in coordination. He also said that Lecorps,
and presumably the GoH, hopes the four companies will sign
the agreement voluntarily, instead of passing legislation
obliging oil companies operating in Haiti to participate in
the Petrocaribe agreement. Eisner observed that Lecorps
seemed under extreme pressure from the GoH to turn the
Petrocaribe agreement into tangible results.


PORT AU PR 00000830 002.2 OF 002


6. (SBU) Comment: Not a drop of petroleum has resulted from
the initial agreement that newly inaugurated President Preval
and the Venezuelan Vice President signed in May, 2006.
Still, the GoH believes the agreement will bear fruit
sometime this year, according to Lecorps. As ExxonMobil and
Texaco (responsible for 45 percent of Haiti's total supply)
representatives have told the Ambassador, they continue to
ship fuel to Haiti regularly, and nothing so far has
threatened to interfere. Lecorps told Poloff on May 2 that
his superiors in the GoH ''do not understand the technical
difficulties the Petrocaribe agreement entails,'' complaining
that they expected him to move too quickly. Post has had the
same experience with various GoH officials, who have
demonstrated in conversations with the Ambassador and others
that they have no expertise with the petroleum logistics.
They understand the immediate financial benefits but have not
thought through the rest, expecting that the oil companies
will come through with their logistical know-how.
SANDERSON

=======================CABLE ENDS============================

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