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Cablegate: Petroandina Faltering?

This record is a partial extract of the original cable. The full text of the original cable is not available.

C O N F I D E N T I A L SECTION 01 OF 02 LIMA 004521

SIPDIS

STATE FOR E, EB A/S WAYNE, WHA AA/S SHAPIRO
ALSO FOR WHA/AND, WHA/EPSC, EB/ESC
TREASURY FOR U/S TAYLOR
DEPT OF ENERGY FOR D. PUMPHREY/G. WARD/S. LADISLAW
ENERGY INFORMATION ADMINISTRATION FOR CHARLES ESSER

E.O. 12958: DECL: 10/12/2015
TAGS: EPET ENRG ETRD PREL ECON VE PE
SUBJECT: PETROANDINA FALTERING?

REF: LIMA 0372

Classified By: Ambassador J. Curtis Struble. Reason 1.4 (B,D)

1. (C) SUMMARY: GOP Hydrocarbon Director Gustavo Navarro
told Econoff on October 13 that an Andean Community meeting
to discuss PetroAndina failed to materialize. At the
preliminary meeting at the subministerial level, Venezuela
wanted PetroAndina to be a vehicle to help only the poor.
Navarro and Ecuadorian, Colombian and Bolivian
representatives shared a different view -- to first explore
alternatives to PetroAndina, and then to ensure that any
PetroAndina ministerial meeting would consider how
PetroAndina could help the general economy. Ecuador wanted
to add to the agenda a discussion on subsidies and their
impact on smuggling. Venezuela then canceled the planned
ministerial meeting without explanation. Navarro said Peru
is unlikely to consider PetroAndina as the election season
begins. The GOP has received no concrete PetroAndina
proposals. END SUMMARY.

2. (U) Econoff discussed PetroAndina with Gustavo Navarro,
Hydrocarbons Director in the Ministry of Energy and Mines
(MEM), Gustavo Navarro, on October 4 and 13. Navarro
attended an Andean Community meeting in mid-September, in
Caracas to set the agenda for an Andean Community meeting of
Energy Ministers on September 30. The Venezuelans planned
the September 30 meeting to advance President Chavez's
PetroAndina concept. Representatives from Bolivia and
Colombia also attended, along with an Ecuadorian
representative via videoconference.

3. (C) Navarro said that he and the other Andean Community
representatives had expected a technical meeting that would
discuss mechanisms for regional oil integration, but instead
the Venezuelan representative gave a political speech.
Navarro began by suggesting that before Andean members went
further on a separate petroleum integration such as
PetroAndina, the Andean Community should explore oil
integration with organizations such as the Latin American
Energy Organization (OLADE) and The Regional Association of
Oil and Natural Gas Companies (ARPEL). Although the
Venezuelan representative did not agree with this, the
representatives from Bolivia, Ecuador and Colombia agreed to
analyze these possibilities before supporting PetroAndina.

4. (C) According to Navarro, the Venezuelan rep said that the
Andean Ministers should recognize at their September 30
meeting that regional petroleum integration should be a tool
to fight poverty. The Peruvian and Ecuadorian reps,
supported by Bolivia and Colombia, argued that petroleum
resources should not be restricted to poverty alleviation,
but should be used to further economic development in
general, including helping private industry as appropriate.
The Venezuelan rep insisted that petroleum policy should
benefit only the poor, but in the end he accepted that the
agenda could include discussing how PetroAndina could further
general development.

5. (C) The Ecuadorian representative asked for an item to
be included in the agenda. He said that Ecuadorian gasoline
subsidies were causing extensive smuggling into Peru and
creating supply problems for Ecuadorian consumers. After
some resistance, the Venezuelan rep agreed to have the
relationship between subsidies and smuggling as an agenda
item.

6. (C) Three days after his meeting in Caracas, Navarro
received an email from the Venezuelan rep saying that a new
agenda was forthcoming; a day later Navarro received another
email saying without explanation that the PetroAndina meeting
to be held on September 30 was canceled. Navarro has heard
nothing more about Venezuelan plans to hold a PetroAndina
meeting. He added that as the Peruvian election season
loomed closer, it was unlikely that the Toledo administration
would move forward on a controversial topic such as
PetroAndina, which would be hotly debated by the media,
politicians and energy pundits.
7. (C) MEM Energy Vice Minister Juan Miguel Cayo told DCM on
October 18 that PetroAndina appears to be little more than a
dream for Chavez at this point. He said that to date the GOP
has received no concrete oral or written proposals for
creation of PetroAndina.

8. (C) COMMENT: President Toledo has made several public
remarks recently disagreeing with the policies of President
Chavez. We see no political will for the Toledo
administration to cooperate with the PetroAndina concept
between now and the end of Toledo's term in July. END
COMMENT.
STRUBLE

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