US embassy cable - 05CARACAS925

C O N F I D E N T I A L  CARACAS 000925 
 
SIPDIS 
 
 
NSC FOR CBARTON 
ENERGY FOR DPUMPHREY AND ALOCKWOOD 
TOKYO FOR SFLATT 
 
E.O. 12958: DECL: 03/29/2015 
TAGS: EPET, VE 
SUBJECT: LONG LIST OF INVITEES FOR NEW VENEZUELAN OFF-SHORE 
GAS ROUND 
 
REF: CARACAS 874 
 
Classified By: Economic Counselor Richard Sanders; for reasons 1.4 (b) 
and (d) 
 
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SUMMARY 
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1. (C) Venezuela's newest off-shore natural gas bid round, 
the "Rafael Urdaneta" project, will be launched at 10:30 am 
on April 4 in Punto Fijo, Falcon state.  Six blocks will be 
offered for bid.  We have received the names of 37 of 46 
companies invited to participate.  The list is heavy on third 
world, state-owned companies.  Two U.S. companies that have 
recently figured in public disputes with the GOV - ExxonMobil 
and Harvest International - were conspicuously absent 
although, after some delay, ExxonMobil received an invitation 
to participate.  End Summary. 
 
2. (U) The "Rafael Urdaneta" project, the bid round for 
off-shore blocks located in the Gulf of Venezuela and off 
Falcon state, will be launched at 10:30 am on April 4 in 
Punto Fijo, Falcon state.  The GOV is chartering aircraft to 
transport invited oil company executives from Caracas to 
Falcon.  In the first phase of a multi-phase process, offers 
will be requested for the award of licenses for six blocks. 
The technical data package will, however, contain information 
relating to all the blocks that have so far been designated 
in the Gulf of Venezuela and off Falcon state.  (Note:  until 
now, the main focus on efforts to strike a natural gas deal 
has been in eastern Venezuela, with the "Mariscal Sucre" 
project in the Gulf of Paria, adjacent to Trinidad, and the 
"Plataforma Deltana" project near the mouth of the Orinoco. 
End note.)   So far, we have verified that invitations would 
be issued to the following 37 companies although we have been 
told that the list numbers 46: 
 
Amerada Hess (US) 
Anadarko (US) 
Apache (US) 
Billington (UK) 
BP (UK) 
ChevronTexaco (US) 
ConocoPhillips (US) 
CNPC (China) 
Devon Energy (US) 
ENIi (Italy) 
El Paso (US) 
Encana (Canada) 
Gas de France (France) 
Inelectra (Venezuela) 
Kuwait Petroleum Company (Kuwait) 
Marubeni (Japan) 
Mitsubishi (Japan) 
Nimir Petroleum Venezuela BV (Saudi Arabia) 
ONGC (India) 
Perenco (France) 
PetroBras (Brazil) 
Petro-Canada (Canada) 
PetroNas (Malaysia) 
PlusPetrol (Argentina) 
Repsol YPF (Spain) 
Sasol (South Africa) 
Shell (Netherlands/UK) 
Sinotec (Taiwan) 
Sinochem (China) 
Sonatrach (Algeria) 
Statoil (Norway) 
Sumitomo (Japan) 
Tecpetrol (Venezuela) 
Texas International Petroleum (U.S.) 
Teikoku (Japan) 
Vinccler Oil & Gas (Venezuela) 
Total (France) 
 
Four member companies of AVHI (Asociacion Venozolana de los 
Hidrocarburos), the association representing the 
international oil industry, were not initially invited to 
 
 
participate.  They include U.S. companies ExxonMobil and 
Harvest International and two Venezuelan companies, Otepi and 
Tecnoconsult. 
 
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COMEDY OF ERRORS SURROUNDING EXXONMOBIL 
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3. (C) ExxonMobil contacted econoff on March 29 to inform her 
that it had not been invited to participate in the new bid 
round.  ExxonMobil de Venezuela Public Affairs Manager 
Richard Bailey subsequently told econoff on March 30 that 
ExxonMobil de Venezuela President Mark Ward received a call 
directly from Minister Ramirez,s office the afternoon of 
March 29 telling him that ExxonMobil was invited.  After 
attempts to verify this through the office of Vice Minister 
Mommer, ExxonMobil received a call early March 30 telling it 
that the original call from Ramirez's office was a mistake 
and the company was NOT invited to participate.  A short 
while later another caller again told the company that it was 
invited.  ExxonMobil has told the GOV that it hopes to 
participate but will not proceed in any way until it receives 
a faxed invitation. 
 
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COMMENT 
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4. (C) It seems that the GOV first sought to retaliate 
against ExxonMobil for its public posture in opposition to 
the unilateral GOV decision to increase the royalties on its 
Cerro Negro heavy crude project from 1 pct to 16.67 pct. 
(Exxonmobil had refused to waive its option to seek 
arbitration regarding this act.)  Apparently it then thought 
better of it.  U.S. independent Harvest remains off the list. 
 (It had been pressed by PDVSA to give it a higher share of 
earnings on its field here, with PDVSA using as leverage its 
refusal to approve, as is required under the terms of the 
contract, Harvest's investment budget, and Harvest in turn 
shutting down operations and publicly notifying investors of 
PDVSA's act.)  Harvest, of course, ultimately has less 
leverage than industry giant ExxonMobil.  The two Venezuelan 
companies that have been struck off the invitation list seem 
to be on a PDVSA black list, at least with respect to western 
Venezuela. 
McFarland 
 
 
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      2005CARACA00925 - CONFIDENTIAL