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Cablegate: Petrocaribe Still Stalled

VZCZCXRO8637
PP RUEHQU
DE RUEHPU #1253 2011926
ZNR UUUUU ZZH
P 201926Z JUL 07
FM AMEMBASSY PORT AU PRINCE
TO RUEHC/SECSTATE WASHDC PRIORITY 6546
INFO RUEHZH/HAITI COLLECTIVE PRIORITY

UNCLAS PORT AU PRINCE 001253

SIPDIS

SENSITIVE
SIPDIS

STATE FOR WHA/EX AND WHA/CAR
S/SRS
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 PGOV PREL HA
SUBJECT: PETROCARIBE STILL STALLED

REF: PORT AU PRINCE 830

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

2. (SBU) SUMMARY: Negotiations between the GOH and fuel
vendors operating in Haiti to implement the PetroCaribe
agreement with Venezuela remain stalled. The GoH sought to
conclude arrangements by July 1 (reftel), but the head of
Haiti's PetroCaribe Office, Michael Lecorps, revealed to
Econoff that the GoH will not yet attempt to impose a
deadline on the companies. In separate conversations with
Econoff in early July, representatives from Texaco and Esso
continue to worry about depending on a sole supplier
(Venezuela) for the Haitian market, local insecurity, and the
worsening relationship between the USG and the Chavez
government. Officials from the locally-owned Dynasa chain of
gas stations sympathize with their industry colleagues, but
affirmed that Dynasa will adhere to GoH policy. Though all
parties expect they will conclude some kind of agreement, we
see impetus to resolve the issues between them in the near
term. End Summary.

3. (SBU) Lecorps on July 5 confirmed to Econoff that the GoH
was struggling to come to terms with Texaco, Esso, Total, and
Dynasa to implement the PetroCaribe agreement. A GoH meeting
with the firms on July 3 produced no agreement, and Lecorps
admitted that the GoH had imposed no new deadline, though he
maintained that the discussions remained urgent and would
continue throughout July. Lecorps was confused as to why
U.S. companies are unwilling to purchase their oil from a
sole supplier, noting they already purchase 99.9 percent of
their oil from Venezuela's state oil company (PDVSA), the
same vendor that the GoH will use. Lecorps emphasized the
GOH's flexibility and patience in dealing with the firms,
recognizing they provide an essential service to Haiti. He
stressed the need for collaboration between the government
and the oil companies, but insisted that the GoH will take
the necessary measures to implement PetroCaribe.

4. (SBU) Eustache St. Lott, Area Manager for Esso in Haiti,
told Econoff that purchasing oil solely from the GOH is not
in Esso's best interest given Haiti's unpredictable security
situation and past instability. Chevron's Retail District
Manager Patryck Peru-Dumesnil concurred with St. Lott that
negotiations continue to drag because of the reservations of
upper management. Peru-Dumesnil stated that the Haitian
market is profitable, but is uncertain of the financial
impact, particularly on retailers. He confirmed the
possibility that Shell could take the place of Chevron in
transporting petroleum to Haiti if Chevron chooses not accept
new terms.

5. (SBU) Michel Guerrier, the general controller of Dynasa,
affirmed to Econoff on July 10 that while Dynasa was in the
same situation as the other gasoline vendors, as a locally
owned enterprise it is obliged to support the GoH. He
claimed the primary obstacle in the negotiations was
Chevron's reluctance to come to terms to continue to deliver
petroleum to Haiti. The GOH, he surmised, does not want to
resort to pressure, but will do so if the companies do not
demonstrate willingness to conclude a new arrangement.

6. (SBU) Comment: Representatives seem to accept that the
government may eventually force them to accept PetroCaribe
terms, but in the near term, they appear to hold most of the
negotiating cards. Haiti depends entirely on the private
firms to manage the import, distribution, and sale of
gasoline and other petroleum products and has no other
expertise at hand. In light of Haiti's weak infrastructure
and precarious distribution system, the departure of any of
the four companies from the market could severely disrupt the
supply of gasoline throughout the country. GoH has already
negotiated an exemption from the standard PetroCaribe
agreement requiring it to manage the accord through a
state-owned oil company.
SANDERSON

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

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