This record is a partial extract of the original cable. The full text of the original cable is not available.
C O N F I D E N T I A L CARACAS 000884
SIPDIS
NSC FOR TSHANNON AND CBARTON
ENERGY FOR DPHUMPHREY AND ALOCKWOOD
E.O. 12958: DECL: 03/09/2014
TAGS: EPET ECON VE CU
SUBJECT: INCREASED OIL SALES TO CUBA?
REF: 2003 CARACAS 4192
Classified By: AMB. CHARLES S. SHAPIRO, FOR REASONS 1.4 (b) and (d)
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SUMMARY
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1. (C) Venezuela's crude and refined product exports to Cuba
have been increased by an additional 25,000 b/d for an
official total of 78,000 b/d, according to a maritime
industry contact. Another Embassy source asserts that Cuba
is now paying a larger portion of its debt to Venezuela with
bonds emitted by the National Bank of Cuba. End Summary.
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OIL SALES INCREASED
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2. (C) On March 8, a maritime industry contact passed to
econoff a copy of an internal PDVSA memo dated February 25,
2005 and signed by PDVSA President Ali Rodriguez, which
authorizes delivery of an additional 25,000 barrels per day
of crude and refined products to Cuba for the month of March
2004. Despite the fact that the one sentence memo authorizes
"the delivery of an additional 25,000 b/d, between crude and
products, for the month of March 2004 to Cupet (the Cuban
state petroleum enterprise)," our contact believes this will
be a permanent increase to 78,000 b/d instead of the 53,000
b/d stipulated in the Caracas Energy Accord of October 2002.
Given that Venezuela's deliveries to Cuba averaged some
30,000 b/d over the 53,000 b/d ceiling in August-October 2003
(see reftel), econoff asked if future sales to Cuba would now
likely exceed 100,000 b/d to which our contact responded
"yes." He also confirmed that Cuba's debt with Venezuela is
nearing US$1 billion.
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CUBA CONTINUES TO PAY WITH BONDS
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3. (C) Another source, formerly a highly-placed PDVSA
executive, passed the text of another Cuba-related PDVSA
document bearing Ali Rodriguez's signature to econoff. This
document, translated informally in Para. 4 below, marks the
formal transfer of approximately US$251 million in National
Bank of Cuba bonds from PDVSA to the Venezuelan treasury and
states that this represents part of PDVSA's dividend payments
to the GOV. Then PDVSA President General Guaicapuro Lameda
informed econoff in early 2002 that he had instituted this
practice of assigning the Cuban bonds to the treasury so that
the central government could bear the risk of non-payment
rather than PDVSA. The source who passed the document to us,
however, added that Cuba had previously been expected to pay
at least some portion of the short term portion of its debt
in cash not bonds. He asserted, although we cannot confirm
this, that Cuba is now paying the entire debt with bonds.
4. (C) An informal translation follows below:
In the city of Caracas, on the 27th of January 2004, citizen
Ali Rodriguez Araque in his position as President of
Petroleos de Venezuela S.A, and under the powers conferred by
the Statutory Document of the corporation, in this Act
delivers six payments emitted by the National Bank of Cuba,
on the basis of the sales contract signed by PDVSA Petroleo
S.A, affiliate of (Petroleos de Venezuela S.A.) with the
Cuban Petroleum Union (CUPET) under the framework of the
Integral Cooperation Convention, celebrated by the Bolivarian
Republic of Venezuela with the Republic of Cuba on 30 October
2000, identified with the numbers 1/12, 4/12, 5/12, 6/12,
8/12 and 12/12 for an amount of US$251,248,523.11 equivalent
to Bs. 401,997,636,976 calculated at an exchange rate fixed
for the sale of these reserves by the Central Bank of
Venezuela at (1,600 bs) for each dollar, to citizen Carmen
Teresa Melendez, National Treasurer, representing the
Ministry of Finance, to receive the above mentioned quantity
as part of the payment to the Bolivarian Republic of
Venezuela of dividends by PDVSA, according to that agreed in
the first annual Ordinary Assembly of the Board of Petroleos
de Venezuela, on 16 December 2003.
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COMMENT
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5. (C) Maintaining subsidized oil sales to Cuba is likely to
remain a high priority for Chavez, despite his own pressing
need for cash. Word of additional sales to Cuba (assuming
the 25,000 barrels are indeed new oil) has not yet hit the
public but, with the Cuban debt climbing, it would
undoubtedly be a hot button issue for the opposition.
SHAPIRO