US embassy cable - 05CARACAS1205

C O N F I D E N T I A L  CARACAS 001205 
 
SIPDIS 
 
 
NSC FOR CBARTON 
STATE PAS USAID FOR DCHA/OTI 
 
E.O. 12958: DECL: 03/22/2025 
TAGS: PGOV, PREL, PHUM, ECON, VE, ENGY 
SUBJECT: AMBASSADOR'S TRIP TO ANZOATEGUI STATE 
 
 
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SUMMARY 
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1. (C) The Ambassador's trip to Anzoategui State March 8-9 
concentrated on the Barcelona/Puerto La Cruz area and the 
Jose industrial complex - a multi-billion dollar US 
investment. The objectives were to emphasize the importance 
of the US-Venezuelan oil relationship, to get a better sense 
of the realities faced by that industry, and to highlight the 
contributions of USAID and private sector social and local 
governance projects to the community. The picture that 
emerged was of a region experiencing unprecedented growth 
driven by oil industry investment. A significant risk factor 
to continued positive growth, however, appears to be the host 
government's tendency to let politics guide its industry 
decisionmaking. Oil industry response to its Venezuelan 
counterparts is steady but cautious, and there is a growing 
emphasis on contingency planning as industry leaders attempt 
to rationalize an increasingly irrational operating 
environment.  END SUMMARY. 
 
2. (U) Visiting Anzoategui State March 8-9, the Ambassador 
met with local political leaders, oil industry executives, 
and media outlets. He visited social and local governance 
projects sponsored by USAID and ExxonMobil. He also conducted 
a town hall for the American citizen community in the area. 
 
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Political Leaders 
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3. (C) The political situation in Anzoategui is highly 
factional, with the political leadership of the region 
preoccupied with internal battles. Friction between 
conflictive strains of Chavismo and the Governor and some 
mayors has resulted in a charged political atmosphere. The 
Ambassador met with mayors representing both ends of the 
political spectrum - MVR Mayor of Barcelona Jose Perez 
Fernandez and Primero Justicia Mayor of Lecheria Gustavo 
Marcano. MVR Governor William Tarek Saab declined to meet 
with the Ambassador. 
 
4. (C) Mayor Jose Perez Fernandez, an ex-Captain and local 
member of the MVR greeted the Ambassador upon arrival at 
Barcelona airport. Perez did not officially agree to meet 
with the Ambassador until March 7. During the short meet and 
greet session, the Ambassador and Perez exchanged formalities 
and touched upon Perez's socio-economic prognosis for 
Barcelona, with the Ambassador pointing to the positive 
social contributions of USAID and US private investment 
within the community. 
 
5. (C) The Ambassador also met with Gustavo Marcano, a first 
term Primero Justicia mayor serving the upscale district of 
Lecheria, on the afternoon of March 8. Marcano is a potential 
IV grantee. During the meeting, the Ambassador probed for 
potential areas of cooperation, and while the meeting turned 
up little in the way of concrete suggestions by Marcano, the 
Ambassador left the door open for future cooperation in the 
areas of education, social investment and commerce. 
 
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Oil Industry Executives 
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6. (U) Anzoategui is oil country and the economic focus of 
the Ambassador's trip was on the oil industry. The Ambassador 
met with representatives from the three U.S. industry majors 
operating in Anzoategui - ConocoPhillips, ChevronTexaco, and 
ExxonMobil. He also visited the Jose petrochemical complex - 
which represents an estimated $7B in US investment - to tour 
the Ameriven-run Hamaca Upgrader. The Hamaca project is the 
fourth and final of the joint venture projects at Jose and is 
operated by Petrolera Ameriven - a joint venture between 
ConocoPhillips, ChevronTexaco, and PDVSA. 
 
7. (C) On the afternoon of March 8 in Puerto la Cruz, Bud 
Chamberlain, Vice-President of ConocoPhillips de Venezuela, 
walked through a two-part presentation on the Corocoro 
natural gas project and ConocoPhillips' sustainable 
development program. The Corocoro project is being developed 
in two phases, he said, to mitigate risks associated with a 
lack of detailed reservoir knowledge and an evolving 
political situation. The Q&A session following the 
presentation focused on PDVSA as a partner and the growing 
presence of the People's Republic of China in the Venezuelan 
market. ConocoPhillips' consensus on PDVSA, according to 
 
Chamberlain, is that PDVSA has quantity and quality of 
personnel issues which impair its effectiveness as a partner. 
ConocoPhillips executives pointed to a braindrain from PDVSA 
as well as a basic lack of manpower. PDVSA has moved to 
restrict participation by former employees in joint venture 
projects, even when they are on the foreign company's 
payroll. Chamberlain was noncommittal about PRC presence, 
stating that he tended not to see the industry in terms of 
influxes of people. 
 
8. (C) ChevronTexaco's Kevin Owens (Operations and 
Engineering Manager Venezuela Offshore) and Kent Mangold 
(Earth Science Manager Venezuela Offshore) told the 
Ambassador the Deltana project is operational: Block 3 
drilling has commenced and first gas is expected by 2010 with 
some room for slippage. At an oil industry dinner hosted by 
ChevronTexaco on the evening of March 8, ChevronTexaco's Dave 
Nelson noted the recent public statements by Citgo executives 
that the company had been overcharging and benefiting from 
transfer payments. Nelson told the Ambassador there would be 
significant tax liabilities that could be investigated if 
this were the case. 
 
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Media Outlets 
---------------- 
 
9. (U) The Ambassador conducted a series of executive 
meetings and interviews with media outlets in radio, TV and 
print. The Ambassador's trip was well-covered with several 
outlets also running his interviews in states outside of 
Anzoategui. Overall, press concerns centered on trip 
objectives, the continuity of the US-Venezuelan oil 
relationship, and the alleged US assassination plot story. 
 
10. (C) The Ambassador commenced his press tour with an 
executive meeting and interview at 870 Pueblo AM. Executive 
meeting attendees included Nelson Belfort Jr. (Circuito 
Nacional Belfort President), Juan Carlos Millan (Director) 
and Juan Jose Bartolomeo (Institutional Relations Director). 
Off-the-record discussion points focused on the economic 
growth of the region and the local political scene. Radio 
executives were positive on the economy, however noted its 
absolute dependency on oil and lack of a secondary service 
industry with some concern. Internal battles between 
competing strains of Chavismo were a distraction for the 
local government, they said. The on-the-record interview was 
conducted by Carlos Acosta and Maria Isabel Parraga and ran 
nationally. 
 
11. (C) The Ambassador also met with Diario El Tiempo 
(opposition) newspaper and Televisora de Oriente on the 
morning of March 9th. The executive meeting with Diario El 
Tiempo was attended by Maria Alejandra Marquez (Executive 
President) and Carmen Guervara (Institutional Relations 
Manager). In a far-ranging discussion over breakfast, Marquez 
elaborated on the development challenges faced by the region, 
making the point that while growth is an overall positive for 
the region, it is characterized by the stops and starts of 
the petroleum industry because development has not been 
evenly distributed among other sectors. Marquez said it also 
placed undue stress on a local infrastructure ill-equipped to 
deal with the challenges posed by rapid growth.  As an aside, 
Marquez noted that she expected the Governor to use Mayor 
Perez Fernandez's meeting with the Ambassador as an excuse to 
oust him.  An on-the-record interview was conducted by the 
editorial staff of the paper. 
 
12. (C) Following his interview with El Tiempo, the 
Ambassador proceeded to Televisora de Oriente (opposition), 
where he met with Pascual Cirigliano (President), Domingo 
Cirigliano (Vice-President), and Francisco Lopez Pando 
(Executive Vice-President).  Discussion focused on the local 
political scene and the difficulties of operating under the 
new content law. Executives noted the friction between the 
Governor and some mayors, citing the Governor's claim to the 
national access the mayors once enjoyed as a potential cause 
of discord.  The Ambassador then taped an interview before 
departing. 
 
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Community Outreach Projects 
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13. (U) An important theme of the Ambassador's trip was the 
social contribution made to the region by public and private 
US sources of cooperation. To highlight this contribution, 
the Ambassador visited two USAID-sponsored projects - Gente 
 
de Soluciones and FUNIDIS - and a community center sponsored 
by Operadora Cerro Negro, an ExxonMobil affiliate. The 
Ambassador attended a signing ceremony for Gente de 
Soluciones on March 8 at the Mayor of Lecheria's offices. 
Gente de Soluciones is an NGO registered by the Local 
Committee for Public Planning (CLPP), and will use a $28K 
USAID grant for a program strengthening women's involvement 
in the CLPP. The USAID-sponsored NGO - the Foundation for 
Handicapped Children (FUNIDIS) - focuses on providing 
physical therapy to children with motor dysfunctions. FUNIDIS 
received a USAID donation for $25K to purchase equipment and 
rehabilitate the center. 
 
14. (C) The Ambassador continued on to the barrio of El 
Vinedo, where ExxonMobil via its affiliate Operadora Cerro 
Negro operates a community center. Over an informal lunch at 
the center, ExxonMobil President de Venezuela Mark Ward told 
the Ambassador that ExxonMobil had selected the center's 
location because the community at El Vinedo has a history of 
blocking the road to the Jose Industrial Complex, yet was 
open to social work from the oil industry. The Ambassador 
offered Ward support for any future social investment project 
ExxonMobil might be considering. 
 
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American Community Town Hall 
---------------------------- 
 
15. (U) The Ambassador addressed a town hall meeting at the 
Colegio Internacional Puerto La Cruz on the evening of March 
8. Approximately 80 American citizens attended. After brief 
remarks by the Ambassador, the floor was opened to questions. 
Questions from the audience centered on US-Venezuelan 
bilateral relations and whether and how they might improve, 
and the ongoing assassination plot story. There was also a 
small but vocal group of American boaters who voiced their 
concerns regarding the security problems they encounter in 
Venezuelan waters. 
Brownfield 
 
 
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      2005CARACA01205 - CONFIDENTIAL