US embassy cable - 05DJIBOUTI924

C O N F I D E N T I A L SECTION 01 OF 02 DJIBOUTI 000924 
 
SIPDIS 
 
STATE FOR AF/EPS ADA ADLER 
STATE ALSO FOR AF, AF/E, AND EB 
LONDON/PARIS FOR AFRICA WATCHER 
 
E.O. 12958: DECL: 09/15/2015 
TAGS: PREL, PGOV, ECON, ETRD, DJ 
SUBJECT: TRANSFER OF MOBIL DJIBOUTI TO TOTAL COMMENCES 
 
REF: RAGSDALE-ADLER E-MAILS (JULY 2005) NOTAL 
 
Classified By: AMBASSADOR MARGUERITA D. RAGSDALE.  REASONS 1.4 (B) AND 
(D). 
 
 1. (C) ExxonMobil corporation has begun the process in 
Djibouti of transferring shares in Mobil Djibouti to French 
oil giant Total, following ExxonMobil's official announcement 
September 5 in Brussels that it had sold to Total shares of 
fuels and lubricants' affiliates in 14 African countries. 
The 14 African countries are Chad, Djibouti, Ethiopia, 
Eritrea, Ghana, Guinea, Liberia, Malawi, Mauritius, 
Mozambique, Sierra Leone, Togo, Zambia and Zimbabwe. 
 
2. (C) Arnaud Blouin, a French national who is President and 
Director General of ExxonMobil Tunisia, arrived in Djibouti 
nearly two weeks ago to lead the transfer process.  In a 
meeting September 11 with Ambassador, Blouin, accompanied by 
outgoing Mobil Djibouti President Alain Adam, described his 
role as "caretaker" and "facilitator" until the transfer 
process is complete, "hopefully before Christmas," he said. 
Blouin will be based in Djibouti but will travel every three 
weeks to Tunis.  In the interim, Adam will move to Tunis to 
act in Blouin's place.  Adam's  departure is set for 
September 20.  (Comment:  Adam has faced personal difficulty 
with Djiboutian authorities, who took steps in late July to 
permanently bar him, while he was on vacation, from returning 
to Djibouti. After interventions with the Djiboutian 
government by the Ambassador and Mobil's regional director in 
Nairobi, Adam was permitted to return for a minimum period. 
See Ref A.  At that time, the government of Djibouti was 
unaware of the pending deal between ExxonMobil and Total. 
End comment)  Blouin reviewed details of the transfer with 
Ambassador, which tracked ExxonMobil's official announcement. 
 When asked about the advantage to ExxonMobil of the 
transaction, Blouin opined that it gave ExxonMobil an 
opportunity to divest in a painless way some of its 
not-so-profitable operations.  In particular, in the case of 
Mobil Djibouti, the transfer relieved ExxonMobil of the issue 
of the disposition of its physical assets in country and 
ongoing claims by the Djiboutian government regarding 
pollution at Mobil Djibouti's fuel storage site in the 
existing port facility. 
 
3. (C) In a subsequent meeting (September 14) requested of 
the Ambassador by Francois de Charnace, Director General of 
Total Djibouti, Charnace told the Ambassador that Total 
agreed to accept from ExxonMobil a "basket" of national 
operations in the fuels/lubricants domain, some of which were 
individually negotiated.  Most are of equivalent size.  He 
said Total may have declined other possible domains -- 
perhaps larger -- because it already controlled a sizable 
share of the market there.  Total sees the purchase of shares 
in the Horn of Africa as an advantage, according to Charnace, 
because it permits an increase in market share for Total in 
the region. In addition, given the long-term commitment of 
France to Djibouti, both historically and practically, the 
move made economic sense. 
 
4. (C) Charnace also advised that acquiring Mobil will put 
Total in a uniquely advantageous position politically in 
Djibouti.  He said the company is not interested in 
re-locating to the new Doraleh port oil storage terminal, 
despite the directive given all oil companies here last year 
that made the move obligatory before January 1, 2006.  Total 
will be in a position, Charnace said, to put pressure on the 
government to permit Total to keep its current depot in the 
existing port.  For starters, he said, Total will control all 
of the fuel services for the U.S. and French military bases 
and will likely become the primary supplier for the 
Djiboutian military and Djiboutian government.   This could 
give it considerable leverage with the government of 
Djibouti.  Charnace did not see Shell, which may remain, as a 
significant competitor. 
 
5. (C) Charnace, Blouin and Adam had earlier briefed the 
Minister of Presidential Affairs, Osman Ahmed Moussa, in the 
wake of the announcement.  Charnace said the first question 
asked by Osman was whether Mobil was pulling out because of 
the "situation" with Adam.  Charnace said he believes the 
Djiboutian government retains the view that Mobil pulled out 
of Djibouti because of the government's treatment of Alain 
Adam, despite Mobil's assurances to the contrary. Charnace 
noted to Ambassador, however, that the blow-up over Adam had 
been of particular interest to the business community in 
France.  Community members interpreted the government's 
actions as one of retaliation against a businessman simply 
because he tried to collect a legitimate debt owed by the 
Djiboutian government.  The call for Adam's ouster, coming on 
the heels of a similar incident involving a French banker in 
Djibouti, raised the question in the French community about 
whether a business person could ever feel safe doing business 
in Djibouti. "Not the right message to send," Charnace said. 
Charnace said the government  of Djibouti had been very keen 
to ensure that in the transfer, there was no dismissal of 
Mobil Djibouti employees so as to avoid the possibility of a 
labor blow-up over loss of jobs.  Both Mobil and Total 
assured that the employee transition, including with pensions 
and benefits, would be seamless. 
 
6. (C) Neither Mobil or Total representatives would give a 
value figure to this commercial transfer. 
RAGSDALE