Cablegate: Argentina: Pan American Energy Principal Carlos Bulgheroni


DE RUEHBU #0131/01 0351608
R 041608Z FEB 08




E.O. 12958: N/A
SUBJECT: Argentina: Pan American Energy principal Carlos Bulgheroni
on New Oil/Gas Discovery and Bilateral Cooperation

Ref: 07 Buenos Aires 2313


1. (SBU) In a January 28 meeting with Ambassador, Pan American
Energy principal and GoA insider Carlos Bulgheroni (protect)
detailed Pan American's significant new oil/gas discovery in Chubut
province, Pan American's intent to significantly expand its
hydrocarbon development budget and the company's concerns over the
short sighted disincentives to new exploration resulting from the
GoA's imposition of new hydrocarbon export tariffs. Commenting on
recent USG/GoA bilateral frictions, Bulgheroni called the two
Kirchner administrations the hardest and "most impenetrable" in his
50-year experience with which to maintain a dialogue. To improve
strained bilateral ties, Bulgheroni said he planned to ask President
Kirchner later that day for strong GoA support of a variety of
programs including a planned April visit of the Kennedy Center
International Committee, and expanded CSIS and Council of the
Americas-sponsored programs. These include working with CSIS to
send members of Argentina's Congress to the U.S. to meet with their
U.S. counterparts, and having Chief of Cabinet Alberto Fernandez and
first husband Nestor Kirchner travel to New York City, probably in
the first two weeks of March, to participate in a Council of
Americas event. (President Kirchner confirmed to Ambassador
subsequently that Bulgheroni had raised these issues with her.)
Bulgheroni also supported expanded contact and exchanges between the
U.S. and Argentine justice systems.
End Summary.

Chubut Oil/Gas Discovery

2. (SBU) Ambassador met January 28 with Carlos Bulgheroni, principal
of family-owned Bridas Energy, which is a 40% partner (with British
Petroleum) in Pan American Energy, the second largest crude oil
producer in Argentina. Bulgheroni note that he would be meeting
later that day with President Cristina Fernandez de Kirchner (CFK)
to brief her on Pan American's announcement of a new 100 million
barrel on-shore oil and gas field discovery in Chubut province's
Cero Dragon basin, where the bulk of Pan American's reserves are
concentrated. The discovery, he said, will add roughly 4% to
Argentina's declining reserve base, and he planned to announce to
the President a doubling of Pan American's 2008 investment budget to
US$ 1 billion. (Note: Chubut Governor Mario Das Neves earlier had
announced that Pan American's discovery was the biggest in Argentina
in years and would double the province's production. The province
produces roughly 25% of Argentina's oil and 7% of natural gas
production. End Note.)

Burden of Hydrocarbon Export Taxes

3. (SBU) Bulgheroni said that Pan American has been the only
Argentine oil company to add production and reserves in recent years
and called the discovery a signal of what can be done. He said he
would use his meeting with CFK to raise the serious burden on Pan
American that the GoA's recent raising of hydrocarbon export tariffs
has imposed. These new export taxes violate Pan American's recent
10-year concession extension agreement signing with the province of
Chubut, and Bulgheroni said that he hopes to resolve this matter
without have to go to international arbitration (Pan American had
suspended a longstanding separate ICSID suit as a condition of it
Chubut concession extension agreement). One possible option, he
said, would be to agree with the GoA to exempt production from newly
added reserves from new export taxes.

4. (SBU) The GoA's imposition of new hydrocarbon export tariffs,
intended to raise revenues and keep domestic prices down, completely
neglects the pressing need to encourage private hydrocarbon company
exploration to increase Argentina's reserves and sustain production,
Bulgheroni said. He called this lack of long-term vision typical of
this (and of many previous) governments' vision.

--------------------------------------------- ----
U.S. Argentine Ties: Kennedy Center, CoA and CSIS
--------------------------------------------- ----

5. (SBU) Bulgheroni, who is the co-chair of the Kennedy
International Committee, said he planned to raise with CFK her
possible involvement in the Committee's upcoming visit in April,
which will overlap with a seminar on arts management conducted in
Buenos Aires by Kennedy Center President Michael Kaiser. Bulgheroni
sees senior GoA participation in these visits as a productive way to
build human ties between the two countries. He hopes to follow-up
by establishing an agreement between the Kennedy Center, the GoA,

and the City of Buenos Aires for the training and education of
artists and staff of the Colon Theater; the Kennedy Center has such
agreements in place with about 15 countries. The GoA's initial
response to his proposals has been very positive, Bulgheroni said.

6. (SBU) Bulgheroni also planned to suggest GoA support for expanded
CSIS and Council of the Americas-sponsored programs on
Argentine-U.S. topics for the year ahead. Through CSIS he is
working to bring members of Argentina's Congress to the U.S. to meet
with their U.S. counterparts, as they have done in the past (often
with PAS funding). With the Council of the Americas, Bulgheroni has
been discussing with Chief of Cabinet Alberto Fernandez the idea of
having Fernandez and first husband Nestor Kirchner travel to NYC,
probably in first two weeks of March, to participate in the first of
these. He called this a very informal way to get Nestor Kirchner
more interested in international affairs and more comfortable with
the United States.

Justice Systems Contact/Exchanges

7. (SBU) Bulgheroni sees the potential for expanded contact and
exchanges between the U.S. and Argentine justice systems as vitally
important: if such exchanges can help build more respect for law and
better enforcement of law and contracts in Argentina, he feels it
will really help change the system from within.

--------------------------------------------- ----------
Bilateral Frictions: An Impenetrable CFK Administration
--------------------------------------------- ----------

8. (SBU) Ambassador explained the USG perspective on recent
bilateral frictions and said Embassy would like to work with
Bulgheroni on these various projects. Bulgheroni (protect) said he
understood completely the U.S. perspective on recent events and the
GoA's reaction. He said he has dealt with every Argentine
government since 1958 and this one seems the hardest and "most
impenetrable" one with which to establish and to maintain a good
dialogue on issues. Yet, he believes it is worth the effort to keep


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