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RR RUEHAO RUEHNG RUEHRS
DE RUEHCV #0163/01 0412210
ZNY CCCCC ZZH
R 102210Z FEB 10 ZFF3
FM AMEMBASSY CARACAS
TO RUEHC/SECSTATE WASHDC 0438
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
Wednesday, 10 February 2010, 22:10
C O N F I D E N T I A L SECTION 01 OF 02 CARACAS 000163
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 AND LROSSELLO
OPIC FOR BSIMONEN-MORENO
AMEMBASSY BRIDGETOWN PASS TO AMEMBASSY GRENADA
AMEMBASSY OTTAWA PASS TO AMCONSUL QUEBEC
AMEMBASSY BRASILIA PASS TO AMCONSUL RECIFE
EO 12958 DECL: 2020/02/10
TAGS EPET, EINV, ENRG, ECON, IT, VE
SUBJECT: Venezuela: Italian Ambassador Briefs on Eni Oil Deals
CLASSIFIED BY: Darnall Steuart, Economic Counselor, DOS, Econ; REASON: 1.4(B), (D)
1. (C) SUMMARY: Italy’s Eni stands to become possibly the second largest international oil company operating in
Venezuela as a result of deals signed at the end of January, according to Italian Ambassador Luigi Maccotta. It has
agreed to develop the extra heavy crude Junin 5 block, to build an upgrader and a 1,000 MW power plant, and to transfer
proprietary heavy oil technology to the Bolivarian Republic of Venezuela (GBRV). The Italian government is interested in
the U.S. perspective on Venezuela’s growing ties with Iran and Eni’s CEO plans to brief NSA Jones on the Italian
company’s activities in Iran in a March visit to Washington. END SUMMARY.
2. (C) At Italian Ambassador Luigi Maccotta’s (protect) request, the Ambassador met him February 4 to discuss the
January 28 visit of Eni XXXXXXXXXXXX to Venezuela. Maccotta stated that the press generally covered all the points
regarding the various energy deals agreed to by the Ministry of Energy and Petroleum (MENPET) and Eni, which included:
B7 A memorandum of understanding (MOU) for the development of the Junin 5 extra heavy oil block in the Orinoco heavy oil
belt (and the creation of a mixed company (60% PDVSA/40% Eni).
o The mixed company expects to produce approximately 240,000 b/d of extra heavy crude (8.5B0 API).
B7 An MOU to create a mixed company to refine production from Junin 5 and the PetroMonagas joint venture (a 60-40 split
mixed company involving PDVSA and BP) (350,000 b/d) with an investment of $9.3 billion. The basic engineering would
begin this year with operational startup slated for 2016.
B7 An MOU for the development of a 1,000 MW combined cycle power plant at the CIGMA complex in Guiria.
B7 An MOU on the transfer of proprietary Eni heavy oil production technology.
B7 Maccotta disputed press reports that Eni had paid a $646 million bonus to PDVSA, saying that Eni had agreed to a $300
million bonus, which will not actually be paid given that PDVSA owes Eni nearly $1 billion.
Maccotta speculated that once these projects move forward, with the exception of Chevron, Eni will be the international
oil company with the largest operations in Venezuela. Maccotta told Petroleum AttachC) following the meeting that
Italy’s OPIC-equivalent agency, SACE, is not involved in the financing of the Eni deals.
3. (C) Ambassador Maccotta shared that the XXXXXXXXXXXX trip was originally scheduled for XXXXXXXXXXXX, but then
“Honduras happened” and Italy found itself on the “wrongside” of the GBRV. At Minister Ramirez’s insistence, the signing
ceremony was rescheduled for January 26, but XXXXXXXXXXXX changed it to January 28 to reinforce the GBRV’s need for Eni.
Maccotta shared that the GBRV had rejected Eni’s proposed changes to the terms and conditions of the oil deals, but 30
minutes before the ceremony was supposed to begin, XXXXXXXXXXXX told Ramirez, “take it or leave it, I can get on my
plane and move on.” Ramirez apparently used that half an hour to convince President Chavez to accept all of Eni’s
proposed changes or risk losing the deal.
CARACAS 00000163 002 OF 002
Venezuelan-Italian Mixed Commission
4. (C) Maccotta also previewed Italy’s agenda for the May Venezuela-Italian Mixed Commission meetings. Of the 76 oil
services companies located in Zulia state that were expropriated on May 8, 2009, roughly 30 were owned by Italian
citizens or descendents of Italian immigrants. (Note: No compensation has yet been paid for these expropriations. End
Note) Additionally, Italy wants to discuss GBRV land seizures and approximately $1.2 billion in pending foreign exchange
approvals for Italian-owned companies.
5. (C) The Ambassadors also shared current perspectives on the economic-political situation of Venezuela and
U.S.-Venezuelan bilateral relations. Maccotta inquired as to U.S. perspectives on the growing relationship between Iran
and Venezuela and noted that ENI XXXXXXXXXXXX is expected to meet with NSA Jones in Washington, DC in March to discuss
Eni’s activities in Iran.
6. (C) COMMENT: It is unclear what bonus Eni really paid PDVSA, but it is interesting that regardless of the figure,
PDVSA likely will not see any cash flow in the immediate future due to its $1 billion debt to the Italian company. The
timing of the Eni-GBRV ceremony was also curious as it fell on the same day MENPET received bids in the Carabobo bid
round. Perhaps Minister Ramirez needed to close a high-profile deal following the GBRV’s January 20 announcements of its
failure to move the Total/Statoil oil projects in Junin 10 forward and the failed Mariscal Sucre natural gas bid round.
END COMMENT. DUDDY