25.9.11

Leopoldo Lopez: Venezuela's Nick Clegg


Yesterday Leopoldo Lopez announced that he will seek to win the opposition primaries, so that he can face Hugo Chavez in October 2012 presidential election. In my opinion, as I wrote earlier in Spanish, Leopoldo has become the king maker, and he definitely has the upper hand, if he plays his cards right. Regardless of what chavismo throws his way. Leopoldo has developed a political platform, that showed some rather impressive numbers in party primaries. He has travelled the country, a la Romulo Betancourt, in the last 2-3 years, and has established (I’ve been told) networks of local support pretty much nationwide. He sits, comfortably, 2nd, 3rd, in polls (not that Venezuelan pollsters can be trusted) despite the fact that he hasn’t held office since 2008.
What Leopoldo needs to do is pact with MUD, the opposition umbrella group of political parties, and throw his lot behind the eventual winner. Making the most of the fact that he still is in political limbo (Chavez's kangaroo courts will ultimately decide whether he can run), but with a binding decision of an international court blowing his sails, he should start campaigning. Ferociously. What are the chavistas going to do, forbid him from campaigning, from travelling up and down the country?
If he wins the primaries, which I doubt, Hugo Chavez loses in October 2012.
If he is not allowed to participate in the primaries, and throws his lot instead behind Henrique Capriles Radonsky, or Pablo Perez , or Maria Corina Machado, or, even turncoat Henri Falcon, Hugo Chavez loses in October 2012.
If he is allowed to participate in the primaries, and comes 2nd, or 3rd, he still has a huge amount of votes, network, political platform and support to lend the winning candidate, Hugo Chavez loses in October 2012.
If, however, caudillo tendency gets the best of him, and he divides the oppo vote, Hugo Chavez will win in October 2012.
So whatever chavismo does, short of assassinating him, he has got, in my opinion, the power to decide who will be the next president of Venezuela.

17.9.11

Si yo fuera Leopoldo...

Tremenda noticia la de ayer. Estaba claro que era sólo cuestión de tiempo para que la Corte Interamericana de Derechos Humanos (CIDH) fallara en favor de Leopoldo. La decisión es de suma importancia. No sólo en Venezuela, donde el régimen tiene esta mañana que agregar cientos de personas a sus listas de enemigos con posibilidad real de quitarles una gobernación, alcaldía, escaño, diputación, etc., en futuras elecciones, sino a nivel hemisférico. La corte ha hecho ilegal la práctica chavista de utilizar las cortes con fines de persecución política. El precedente está sentado. De aquí en adelante, Chavez y sus títeres regionales tendrán o que inventarse otra, o que declararse dictadores para poder pasarse por el forro los dictámenes vinculantes de la CIDH. De aquí en adelante, políticos perseguidos, e ilegalmente inhabilitados, sólo tendrán que citar la decisión del caso López Mendoza Vs Venezuela para demostrar el totalitarismo tapa amarilla de caudillos como Chavez.

Ahora bien, donde las cosas se ponen interesantes es en el panorama local. La decision de ayer es crucial, por cuanto le ha otorgado a Leopoldo una oportunidad histórica, una oportunidad que va a definir el resto de su carrera política. Mientras Chavez deshoja la margarita, y decide mover a su Tribunal Supremo de Justicia de uno u otro modo, Leopoldo representa la pieza clave del triunfo de la oposición en octubre del 2012.

El golpista, y su patrones cubanos, sin duda están cuantificando el "efecto Lopez" en una eventual división de los votos de la oposición. La pregunta que se deben estar planteando es: si gana Henrique Capriles las primarias de la oposición, ¿cuántos votos le quitará Leopoldo a Henrique? La pregunta parte de la premisa de que Leopoldo quiere ser presidente y no declinará su posibilidad en función de una candidatura unitaria, que no sea con él como candidato único. Leopoldo se ha labrado una fama de caudillo. Su paso por PJ y UNT dejaron una cierta indicación de que el tipo no es un "team player", sino alguien convencido de su infalibilidad, bien dispuesto a llevarse por delante lo que sea, y a quien sea, si las cosas no resultan favorables a los objetivos que él pueda tener en determinado momento.

Pero el pasado político de Leopoldo no debe ser un obstáculo en la reinstauración de la democracia en Venezuela. Si yo fuera Leopoldo, éste sería mi plan. Independientemente de lo que Chavez ordene a sus jueces, y, lo más importante, de cuándo los mismos decidan levantar la inhabilitación ilegal, haría un pacto con los candidatos y partidos de oposición. Gane quien gane, si es que mi candidatura no es admitida por el CNE sino hasta después de culminado el proceso de primarias, no dividiría el voto opositor, sino que sumaría los votos que pueda aportar, y mi maquinaria, al candidato/a que gane las primarias. Sea quien sea. Por supuesto que dicha promesa y aporte tendrían que ser debidamente recompensados en una futura administración, sea con el nombramiento de Vice Presidente o cualquier otro cargo de mi escogencia.

La CIDH le ha conferido a Leopoldo el poder de decidir quién será el proximo presidente/a de Venezuela. Leopoldo, y no Chavez, es el nuevo "king maker" en Venezuela. Si sus ansias presidenciales y ego se imponen, es muy probable que Chavez vuelva a ser "electo" por otro periodo de 6 años. La historia, sin duda, castigará tal egoismo en esta hora aciaga. Si, por el contrario, Leopoldo decide sumar sus esfuerzos a restablecer la paz, la democracia, y el estado de derecho en Venezuela, y asegurarse de que quienquiera que represente a la oposición gane las elecciones, sin ninguna duda será presidente de Venezuela, en el 2012, o en el 2018.

Con apenas 40 años de edad, el que está en la mejor posición para estar desojando margaritas no es el comandante presidente precisamente.

6.9.11

Commercial interests keep tyrants in power

One can see them around. They are unmissable. For all their designer jeans, cool shirts, buckle shoes, limited-production watches, matte or white cars and bespoke perfumes, they can't fool anyone. A characteristic tackiness gives them away. Russians, Africans, above all Arabs, Latin-Americans, to a lesser extent Europeans, they are either the architects of tyranny, or its offsprings. Mayfair, Chelsea, Knightsbridge, Belgravia... London's most expensive areas are their playground. They come, and burn the ill acquired riches, the billions stollen from their countries, or made on illicit trades, as if there's no tomorrow. Some people speak about the "unacceptable face of Capitalism", in reference to the financial crisis that continues to affect our world, alas the very same critics of capitalism, and everyone else, are eager to welcome, with open arms, the characters above, and their money. They fall over themselves to accommodate every whim, in a nauseating spectacle solely worthy of contempt. Ask Frank Williams, Ken Livingstone, or some folks at LSE.

But then, one has to read stuff like this, regarding Britain's role in preventing development of Libya's alleged programme of WMD:
The British role in delivering this superb outcome which made the world a notably safer place was praised at the highest levels in Washington; it ranks among our greatest foreign policy successes since the end of the Cold War.
Honestly, I do not know where to begin. Still fresh in my memory are Colin Powell's infamous words about "mobile factories of WMD" in Iraq. One has to be a fanatic war hawk willing to bomb the shit out of one's perceived enemies, or an incredible ignorant person, to come up with such arguments. For only an extremely ignorant first world person can really believe that a bunch of Middle Eastern fundamentalists living in tents in a dessert have the technical expertise and technological capacity to design, develop, and produce successfully advanced weapons that could potentially put at risk the safety of the Western world. More likely, as we saw on 9/11, the preferred weapons are rather more mundane, and much easier to acquire. The last time we saw a threat of nuclear war issued by a deranged tinpot dictator was the missile crisis in Cuba in 1962, and even that one depended on Russia.

Tyrants, the world over, are indeed a menace: for the disgraced citizens of the countries where they reach power, and, above all, for the commercial interests of first world nations. One only has to look at what's surfaced recently regarding weapons sales to Gaddafi. China is up to its neck in it, but so is Britain, and Russia, and were it not those three, it would have been France, the USA, Italy, Spain, or Brazil. There is no consideration whatsoever to the victims on the ground. When there are billions to be made, no one gives a toss about them. And this is what can be called "smart and effective", in the words of Charles Crawford, author of the article linked above. The "smart and effective" thing to do, is to prop the Gaddafis of our world with the most technologically advanced weaponry, so that they can carry on oppressing and killing to stay in power, but crucially, they can carry on doing business with the first world, they can continue snapping prime properties in N1, W1 and SWs, they can be the source of untold fortunes of 'respectable' businesses, and businessmen alike.

In an evidently Chamberlain-esque way, Mr Crawford thinks that engaging tyrants is the way forward, for such interactions between democracies and dictatorships would, sooner or later, permeate the minds of tyrants and, eventually, they will abandon their ways in favour of democratic tenets like rule of law, respect for human rights, etc. Such proposition is untenable. To advance the notion that a business relationship is going to change people that have no qualms in massacring their own is, erm, beyond stupid, is sheer insanity. But it reveals how utterly ignorant these diplomats of the first world really are. Chaps that have grown up in safe societies, are educated in the best schools with symmetrically perfect lawns, have never been forced to confront the realities of living with rampant crime, with totalitarianism, with poverty, these people are ill equipped to deal with the very real thugs that run some of our countries. One can only laugh at such disconnected naivete.

As a matter of fact, Gaddafi, Assad, Castro, Mugabe, Chavez... all of them are there, firmly entrenched in power, for there's plenty of Chevrons, BPs, Exxons, Mitsubishis, ENIs, Totals, BAEs, Vitols, Saabs, Gemaltos, etc, desperate to go into deals with them. There are also Tony Blairs, Gordon Browns and Alex Salmonds, and equally, David Camerons and Nicholas Sarkozis, 'advancing democracy', so that British and French businesses can carry on with their standard practices in the third world.

The world will undoubtedly be a better place without the mad dog. However, no freedom loving Libyan, Zimbabwean, Cuban or Venezuelan will dispute that our nations will be safer and freer without the sheer hypocrisy and greed of Western governments, officials, businesses and businessmen pretending to be cavaliers of freedom.

3.9.11

PDVSA's Fadi Kabboul: "China had only paid $5/barrel of crude"

US embassy cable - 10CARACAS233

VENEZUELA: PDVSA Director for Strategic Planning Alleges it is Open for Dialogue with U.S.

Identifier:10CARACAS233
Origin:Embassy Caracas
Created:2010-02-26 13:31:00
Classification:
Tags: EPET EINV ENRG ECON VE
VZCZCXRO4257
RR RUEHAO
DE RUEHCV #0233/01 0571331
ZNY CCCCC ZZH
R 261331Z FEB 10 ZFF3
FM AMEMBASSY CARACAS
TO RUEHC/SECSTATE WASHDC 0527
INFO OPEC COLLECTIVE
WESTERN HEMISPHERIC AFFAIRS DIPL POSTS
RHEBAAA/DEPT OF ENERGY WASHINGTON DC
RHEHAAA/NATIONAL SECURITY COUNCIL WASHINGTON DC
RHEHNSC/WHITE HOUSE NATIONAL SECURITY COUNCIL WASHINGTON DC
RHMFISS/HQ USSOUTHCOM MIAMI FL
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
C O N F I D E N T I A L SECTION 01 OF 02 CARACAS 000233 
 
SIPDIS 
ENERGY FOR ALOCKWOOD AND LEINSTEIN, DOE/EIA FOR MCLINE 
HQ SOUTHCOM ALSO FOR POLAD 
TREASURY FOR MKACZMAREK 
COMMERCE FOR 4332/MAC/WH/JLAO 
NSC FOR DRESTREPO, RCRANDALL AND LROSSELLO 
OPIC FOR BSIMONEN-MORENO 
AMEMBASSY BRASILIA PASS TO AMCONSUL RECIFE 
AMEMBASSY OTTAWA PASS TO AMCONSUL QUEBEC 
AMEMBASSY BRIDGETOWN PASS TO AMEMBASSY GRENADA 
 
E.O. 12958: DECL: 2020/02/26 
TAGS: EPET, EINV, ENRG, ECON, VE 
SUBJECT: VENEZUELA: PDVSA Director for Strategic Planning Alleges it 
is Open for Dialogue with U.S. 
 
REF: 10 CARACAS 155; 09 CARACAS 1593; 09 STATE 99343 
 
CLASSIFIED BY: Darnall Steuart, Economic Counselor, DOS, Econ; 
REASON: 1.4(B), (D) 
 
1. (C) SUMMARY: Fadi Kabboul, a member of PDVSA\'s board of 
directors, asserted PDVSA\'s openness to dialogue with the USG, and expressed interest in the US Geological Survey\'s survey on recoverable oil in the Orinoco Belt that effectively doubled Venezuela\'s estimated reserves, and the on-going debate regarding Venezuela\'s production numbers.  He noted current Chinese difficulties in operating in Venezuela.  He also shared that the Washington-based Venezuelan Energy Counselor had returned recently to Caracas to direct the planning staff of the newly formed Electricity Ministry.  END SUMMARY. 

2. (C) PETROLEUM RELATIONS: Petroleum AttachC) (PetAtt) spoke with 
Fadi Kabboul (Director of PDVSA) on February 18 when he was 
identified on the visa line by an alert Consular Officer.  [NOTE: 
This message should be read in the context of Refs A and B that 
provide a counterbalance to Kabboul\'s forward leaning assessment of 
the U.S. relationship and on Venezuela\'s production figures.  END 
NOTE]  Kabboul shared that his brother George Kabboul, President of 
PDVSA subsidiary PDV Marina, had been concerned following his 
recent invitation to PetAtt to visit his office (Ref A) and had 
contacted his brother to inquire whether he might be \"in trouble.\" 
Fadi Kabboul told PetAtt that his door is \"always open,\" that he 
\"manages the U.S. petroleum relationship,\" and that \"we should get 
together.\"  Kabboul then asked whether PetAtt remembered PDVSA 
Executive Vice President Eulogio del Pino\'s verbal invitation to 
PetAtt offered on the margins of the World Heavy Oil Congress in 
November 2009 to call his office and arrange for a meeting.  [NOTE: 
Fadi Kabboul offered a revisionist view of history.  He has never 
offered a meeting or claimed to be \"in charge\" of the U.S. 
petroleum relationship.  Nor did del Pino offer PetAtt a meeting. 
END NOTE]  Kabboul also stated his understanding that Venezuelan 
Ambassador to the U.S. Bernardo Alvarez was supposed to have a 
discussion with the Ambassador concerning the expired U.S. - 
Venezuelan MOU on Energy Cooperation.  [NOTE: Following inquiries 
from the Venezuelan Embassy and PDVSA directors in Caracas, Post 
submitted a diplomatic note (Ref C) to the GBRV in September 2009 
agreeing to discuss the GBRV interest in resurrecting the MOU.  The 
GBRV has not responded to the diplomatic note.  END NOTE] 
 
3. (C) Kabboul stated that he would travel to Washington, DC the 
week of March 1 to participate in the Energy Council\'s private 
meetings, including a Western Hemisphere Energy Roundtable on March 
4. [NOTE: Subsequent to this meeting with Kabboul, the Ambassador 
agreed to address this private gathering of state legislators.  END 
NOTE.]  Kabboul said that Minister Ramirez instructed him to meet 
with the U.S. Department of the Interior\'s U.S. Geological Survey 
regarding a report it published in February titled \"An Estimate of 
Recoverable Heavy Oil Resources of the Orinoco Oil Belt, 
Venezuela.\"  The technical report essentially doubled the estimate 
of recoverable heavy oil in Venezuela\'s Orinoco belt.  Kabboul 
claimed he has a meeting scheduled with the principal drafter, 
Christopher Schenk, of the report and is primarily interested in 
discussing the USGS decision to use a recovery factor of 40% in the 
report.  [NOTE: Post contacted USGS and confirmed that it had not 
been approached by the GBRV or PDVSA regarding a possible meeting 
to discuss the report.  USGS agreed to inform the Venezuela Desk if 
the Venezuelan Embassy requests a meeting.  END NOTE.]  He added 
that PDVSA is sending a technical delegation to visit Chevron\'s 
Bakersfield production field to understand better how Chevron has 
achieved a recovery rate of 70%.  [NOTE: MENPET has used a 20% 
recovery rate in its negotiations with the IOCs.  END NOTE]  
 
4. (C) OIL PRODUCTION: Kabboul claimed that MENPET\'s release of 
petroleum export documentation to British auditing company 
Inspectorate had settled the issue regarding PDVSA\'s production 
levels.  He expressed a belief that any secondary sources that do 
not upwardly revise estimates of Venezuelan crude production are 
acting out of political motives and refusing to recognize the 
\"transparency\" the GBRV has brought to the issue.  He said that 
domestic consumption is only 540,000 b/d. [NOTE: The majority of 
non-governmental estimates put Venezuelan domestic consumption 
above 700,000 b/d.  END NOTE] 
 
5. (C) PDVSA ON CHINA AND RUSSIA: Kabboul stated that negotiations 
with CNPC to form a mixed petroleum production company in the Junin 
4 block of the Orinoco heavy oil belt had stalled and might be in 
jeopardy, but that negotiations with the Russian consortium for a 
project in Junin 6 were progressing.  He claimed that the GBRV is 
extremely upset with Chinese companies due to the discrepancy 
between Chinese petroleum import statistics that suggest the PRC is 
profiting from Venezuelan oil purchases by diverting the crude to 
third markets and earning a sizable margin between the price the 
Chinese companies pay the GBRV and the price they receive on the 
open market for the same shipment.  Kabboul intimated that tankers 
had been diverted to the U.S., Africa, and elsewhere in Asia. 
Furthermore, PDVSA had analyzed its crude sales to China and 
determined that China had only paid $5/barrel of crude on a couple 
of deals. 
 
6. (C) CHEVRON AND CARABOBO: Kabboul stated that according to an 
internal PDVSA study, Petroboscan (a PDVSA/Chevron mixed company) 
is the most profitable petroleum mixed company in Venezuela.  He 
added that Chevron was the big winner in the Carabobo bid round and 
that Chevron President for Africa and Latin America Ali Moshiri \"is 
great.\"  He expects Chevron and PDVSA will finalize a mixed company 
agreement by the March 24 deadline announced by President Chavez. 
 
7. (C) PETROLEUM COUNSELORS: Kabboul mentioned that Carlos 
Figueredo, the Petroleum Counselor in the Venezuelan Embassy in 
Washington, DC had returned to Caracas to take up a position as the 
head of planning in the new Ministry for Electricity.  Figueredo 
has a long-standing close relationship with Electricity Minister 
(and former PDVSA CEO) Ali RodrC-guez).  Kabboul stated that he is 
vetting potential replacements. [NOTE: Traditionally, the GBRV 
nominates a senior PDVSA executive to serve as its Energy Counselor 
in Washington, DC.  Kabboul preceded Figueredo in that position. 
END NOTE] 
 
8. (C) COMMENT: Kabboul has proven to be a reliable interlocutor 
over the last couple of months on basic issues, responding 
privately to phone messages and e-mails.  He has not demonstrated 
an ability to engage honestly in conversations of substance, but 
rather toes the party line.  Offers of meetings with EmbOffs, while 
the GBRV disregards the official USG response to requests for 
dialogue on substantive energy issues with the Ambassador, are 
disingenuous.  END COMMENT. 
DUDDY 

1.9.11

Wikileaks - Skeletons in PDVSA's closet

E.O. 12958: DECL: 01/12/2017
TAGS: EPET, ENRG, EINV, ECON, VE
SUBJECT: OIL TRADING: SKELETONS IN PDVSA\'S CLOSET

REF: A. 2006 CARACAS 3224
 B. CARACAS 183 AND PREVIOUS

Classified By: Acting Economic Counselor Shawn E. Flatt for Reason 1.4
(D)

1. (C) SUMMARY: A senior PDVSA executive who was forced into
retirement in March 2007 stated PDVSA exports 38 million
barrels of oil per month excluding crude from the former Faja
strategic associations.  President Chavez ordered PDVSA to
stop exporting to the United States before the November
elections but was later talked out of it but he remains
intent on carrying this out.  PDVSA is losing 7 billion USD
per year due to its need to import components for gasoline.
PDVSA is also losing 3 billion USD per year due to Cuban
state oil company CUPET\'s failure to pay for crude shipments
and an undetermined amount from fuel oil shipments to
Argentina.  Shipments of fuel oil to China were suspended due
to the steep discount the Chinese demanded.  A PDVSA director
told the executive PDVSA would be \"dead\" if the price of WTI
dropped to 37 USD.  END SUMMARY

--------------------------------
THEY DON\'T KNOW WHAT IS GOING ON
--------------------------------
2.  (C) Petroleum Attache met on July 17 with a former senior
PDVSA executive who was forced into retirement in March 2007
to discuss the inner workings of PDVSA.  The executive\'s last
position with the company was in trading.  According to the
executive, PDVSA has consistently exported 38 million barrels
of crude oil per month.  This figure does not include crude
exports from the former Faja strategic associations.  Of this
amount, 900 to 925,000 barrels per day goes to Citgo.  The
supply contract with Citgo has a yearly quota and daily
figures fluctuate.  For example, Citgo does not want to
receive any crude from PDVSA after the second week in
December due to the fact that it wants to run down its stocks
for tax purposes.

3.  (C) According to the executive, PDVSA is selling most of
its production on the spot market \"at distress\".  In other
words, the market knows that PDVSA has to sell its crude and
does not have the luxury of shopping around for the best
offer.  The executive stated PDVSA was selling its crude at a
\"distress of six\" (a discount of six USD per barrel).  He
believed traders from major IOCs were colluding to lower the
price on PDVSA\'s crude.  He stated the traders were able to
buy at a discount because they \"were helping\" PDVSA to place
its production.  The executive stated PDVSA does not have any
trading strategy.  When Petatt noted contacts have stated
PDVSA traders are young and inexperienced, the executive
stated PDVSA senior management consciously decided that it
did not want traders who knew what they were doing.  One
reason for the decision was that senior PDVSA management did
not want traders who could figure out how  senior management
was stealing from the company.  In addition, the managers did
not want traders who had the financial acumen to steal from
PDVSA.  The executive stated an experienced trader stole 20
million USD from PDVSA and deposited the funds in Panama.

4. (C) The executive also claimed during his tenure in
trading that he worked directly for President Chavez.  He was
told on a number of actions to carry out trades that
originated with President Chavez.  According to the
executive, President Chavez ordered PDVSA to stop exporting
crude to the United States in the run-up to elections in
November.  The order was never carried out because someone
convinced Chavez that the idea was counterproductive for
Venezuela.   The executive opined that now that Chavez has
the idea in his head he will eventually try to carry it out.

5. (C)  When asked if contingency plans were drafted for a
cutoff of Venezuelan crude supplied to the States, the
executive laughed derisively and replied no plans were in
place and that the senior management of PDVSA had no idea
what it was doing.  He repeatedly stated senior PDVSA
management was not sure what PDVSA\'s actual production
numbers were.  He also claimed that they were unaware of how
much money PDVSA was actually earning.  He later amended his
comments and said that Eudomario Carruyo, a PDVSA director
and the company\'s de facto CFO, knew exactly how much money
PDVSA was generating and where the funds were flowing.

----------------------------------
GASOLINE COMPONENTS AND LUBRICANTS
----------------------------------
6. (C) The executive stated PDVSA is currently importing
125,000 barrels of gasoline components per day due to
problems with its own refineries.  At current market prices,
the executive estimated that the imports were costing PDVSA
approximately 4 billion USD per year. (COMMENT: The
executive\'s statements concerning the importation of gasoline
components gibes with what we reported in Reftel A.  END
COMMENT)

7. (C) He also stated PDVSA has been importing base
lubricants due to an inability to secure the crudes it needed
to manufacture lubricants at its own refineries.  The
executive stated PDVSA used to import Basra crude to
manufacture lubricants.  When senior management decided Basra
crude was too expensive, it ordered the executive to secure a
mix of Maya and Isthmus crudes.  The executive complained
that use of the mix did not make sense commercially but was
over-ruled by his superiors.  Unfortunately for PDVSA,
President Chavez then had a falling out with Mexican
President Vicente Fox and ordered PDVSA to quit purchasing
oil from the Mexicans.  As a result, PDVSA was forced to
import base lubricants rather than manufacture them.  The
executive did not give any figures on how much PDVSA is
losing due to the importation of lubricants.

------------------
CUBA AND ARGENTINA
------------------
8. (C) In addition to what PDVSA is losing on the importation
of gasoline components, the executive estimated it is losing
approximately 3 billion USD due to the failure of Cuba to pay
for the crude it is importing from Venezuela.  The executive
stated Venezuela recently signed a new contract with Cuba for
the sale of crude to CUPET, the Cuban state oil company.  He
stated he is not sure about the terms of the new contract and
added knowledge of the specific terms of the contract
appeared to be limited to very senior BRV officials.

9.  (C) The executive stated that PDVSA began shipping fuel
oil to Argentina in 2004.  He was told at that time that
PDVSA had to send oil to Argentina because the \"Argentines
were freezing to death\".  The executive told his superiors
that PDVSA could not send Venezuelan fuel oil to Argentina
because its sulfur content was too high for Argentine plants.
 In order to meet the commitment to supply Argentina with
fuel oil, PDVSA was forced to buy fuel oil from Mexico.  The
executive stated PDVSA lost money on all of the Argentine
fuel oil shipments between 2004 and 2006.  He was not clear
if PDVSA has shipped or will ship fuel oil this year.

---------------------
PACIFIC RIM AND CHINA
---------------------
10. (C) The executive also stated that PDVSA was ordered to
adopt a Pacific Rim strategy in 2004.  He complained that
PDVSA could never make money in the Pacific Rim due to the
nature of the market.  According to the executive, the market
is composed of two parts: California/the West Coast of the
United States and the Pacific Rim in Asia.  The executive
stated the Middle Eastern producers, particularly Saudi
Arabia had a lock on the Asian market and had long term
supply contracts.  He said Saudi Arabia would never allow
PDVSA to break its hold on the Asian markets and has used
PDVSA\'s attempts to break into the market as opportunities to
steal market share on the Eastern Coast market of the United
States.

11.  (C) The executive also claimed PDVSA was no longer
shipping oil to China despite public claims to the contrary.
He stated the Chinese were buying fuel oil at \"a distress of
20\".  As a result, PDVSA could not supply the Chinese at
those terms without a significant loss.  PDVSA attempted to
negotiate a new deal with the Chinese but was only able to
reduce the distress to 18.  As a result, it halted shipments
to China.  (COMMENT: A senior CNPC executive told Petatt that
her company was receiving a discount on oil purchases from
PDVSA.  She did not specify the amount of the discount.  It
was our understanding that PDVSA is still shipping crude to
China but we base this on implications from CNPC officials\'
comments rather than on hard evidence.  END COMMENT).

----
IRAN
----
12.  (C) According to the executive, PDVSA has made two
gasoline shipments to Iran.  The last shipment occurred in
February 2007.  In one case, PDVSA was forced to use one of
its own coastal tankers to carry the gasoline to Iran.  The
executive stated the tanker was old and in very poor shape.
Since the tanker was not supposed to leave Venezuelan coastal
waters, insurance would not have covered it if an accident
had occurred on the high seas.  The executive estimated that
it would take a Panamax class tanker approximately 80 days to
make a round trip to Iran.  He estimated that it would have
taken the PDVSA vessel considerably longer due to its
condition.  He stated the vessel was supposed to carry
additives on its return trip.

-----------------------
WHERE IS PDVSA\'S MONEY?
-----------------------
13.  (C) The executive claimed Carruyo told him in November
at a luncheon that PDVSA would be \"dead\" if the price of WTI
reached 37 USD per barrel.  He said he personally believes
the danger point for PDVSA is a higher WTI price due to
PDVSA\'s declining production and management problems.
However, he declined to give a specific price.

14.  (C) The executive also said PDVSA was instructed to
remove its funds from U.S. banks several years ago.  He
claimed Carruyo approached him and asked him for suggestions
on which European banks to use.  The executive was surprised
by the request but recommended Dresdner Bank AG and Deutsche
Bank.  Carruyo then asked if he thought Barclays Bank was
another candidate and the executive replied no.

15.  (C) The executive also stated he was grateful to Carruyo
because he is a PDVSA pensioner.  He stated Carruyo moved the
9 billion USD PDVSA pension fund to a series of European
banks several years ago in order to \"hide the money from
Chavez\".

-------
COMMENT
-------
16.  (C) Although we have little or no way of confirming the
executive\'s claims, we note that they are in line with many
of the things that we have heard from other contacts and
reported in the past (Reftel B).  We believe that his claim
that Chavez is contemplating the suspension of crude exports
to the United States should be taken seriously.