VZCZCXYZ0035
PP RUEHWEB

DE RUEHWN #1127/01 1811616
ZNY CCCCC ZZH
P 301616Z JUN 06
FM AMEMBASSY BRIDGETOWN
TO RUEHC/SECSTATE WASHDC PRIORITY 2822
INFO RUCNCOM/EC CARICOM COLLECTIVE
RUEHCV/AMEMBASSY CARACAS 1460
RUMIAAA/HQ USSOUTHCOM J2 MIAMI FL
RUMIAAA/HQ USSOUTHCOM J5 MIAMI FL
RUEHCV/USDAO CARACAS VE

C O N F I D E N T I A L BRIDGETOWN 001127 
 
SIPDIS 
 
SIPDIS 
 
SOUTHCOM ALSO FOR POLAD 
 
E.O. 12958: DECL: 06/30/2016 
TAGS: ENRG EPET PGOV PREL DO GJ SC VE XL
SUBJECT: PETROCARIBE UPDATE #23:  DOMINICA, GRENADA AND ST. 
KITTS SIGN NEW DEALS WITH VENEZUELA 
 
REF: A. BRIDGETOWN 877 
 
     ¶B. BRIDGETOWN 602 
     ¶C. 05 BRIDGETOWN 2459 
     ¶D. 05 BRIDGETOWN 2452 
     ¶E. 05 BRIDGETOWN 2085 
 
Classified By: DCM Mary Ellen T. Gilroy for reasons 1.4 (b) and (d). 
 
¶1. (C) Summary:  Dominica, Grenada, and St. Kitts have each 
signed bilateral agreements with Venezuela allowing joint 
venture companies to begin receiving petroleum products under 
the PetroCaribe oil accord.  Dominica and Grenada will 
reportedly import several different types of fuel, including 
diesel that would be used for generating electricity. 
Neither country has, however, begun negotiations with their 
privately owned electric companies about utilizing the 
Venezuelan diesel.  These three countries' initiatives come 
amidst indications that joint venture PetroCaribe-related 
companies could soon be established in other Eastern 
Caribbean nations.  Combined with the reported failure of 
Organization of Eastern Caribbean States (OECS) members to 
agree to negotiate as a bloc for oil from Venezuela, these 
developments suggest that countries in the region will 
continue dealing bilaterally with Venezuela, thereby missing 
a potential opportunity to maximize the economic benefits of 
PetroCaribe.  End summary. 
 
------------------------------------------- 
Dominica, Grenada, and St. Kitts Make Deals 
------------------------------------------- 
 
¶2. (U) The governments of Dominica, Grenada, and St. Kitts 
signed bilateral agreements with Venezuela that should allow 
these countries to begin receiving petroleum products under 
the concessionary financing scheme offered by PetroCaribe. 
In Dominica, Minister of Energy Reginald Austrie and 
Alejandro Granado, Vice President of the Venezuelan National 
Petroleum Company (PDVSA), signed an agreement on June 26 
establishing a new joint venture company, PDV Caribe Dominica 
Ltd., to import and distribute Venezuelan petroleum products. 
 An agreement was also signed in Grenada on June 26 by 
PDVSA's Granado and Grenada Minister of Energy Gregory Bowen 
acting in his capacity as the head of PetroCaribe Grenada 
Ltd., a joint venture company set up several months ago.  A 
June 29 agreement between PDVSA and St. Kitts formed the St. 
Kitts Energy Company Ltd., a new joint venture company that 
will reportedly study the creation of a petroleum supply 
facility on the island. 
 
------------------------------------- 
Antigua and St. Vincent Could As Well 
------------------------------------- 
 
¶3. (U) Discussions aimed at establishing similar joint 
venture companies are reportedly underway with Antigua, 
according to a PDVSA press release.  The June trip by St. 
Vincent and the Grenadines Prime Minister Ralph Gonsalves to 
Venezuela, where he reportedly met President Hugo Chavez 
along with visiting Dominica Prime Minister Roosevelt 
Skerrit, indicates that a joint venture company could soon be 
established in St. Vincent as well. 
 
------------------ 
Oil, Arriving Soon 
------------------ 
 
¶4. (U) In signing the agreement with PDVSA, the Government of 
Dominica announced that it had identified a site outside of 
the capital, Roseau, at which it plans to construct, with 
Venezuelan assistance, facilities to store diesel, gasoline, 
and liquefied petroleum gas (LPG) supplied by PDVSA.  No date 
was given for the first delivery of these fuels, although 
Dominica reportedly received its first PetroCaribe-related 
petroleum product on June 7 when the first of several planned 
shipments of asphalt arrived from Venezuela.  Under the 
agreement signed in Grenada, PDVSA will reportedly provide an 
annual supply of 55,000 barrels of diesel, 85,000 barrels of 
gasoline, and 20,000 barrels of fuel oil.  The Government of 
Grenada (GOG) optimistically expects the first fuel shipment 
to arrive at some point in the next three months. 
 
--------------------------------- 
Electric Company Kept in the Dark 
--------------------------------- 
 
¶5. (C) According to press reports, the Grenada agreement was 
 
between PetroCaribe Grenada Ltd., GRENLEC, the nation's 
electric company, and the national airport authority.  The 
agreement was actually between PetroCaribe Grenada and PDVSA, 
according to Bob Blanchard, Jr., President of WRB 
Enterprises, Inc., a Florida-based company that owns the 
controlling share of GRENLEC.  The GOG called the Managing 
Director of GRENLEC, Vernon Lawrence, to a last minute 
meeting on June 26, where he found himself standing in the 
midst of the PetroCaribe signing ceremony.  The Government 
announcement that Grenada would soon begin receiving diesel 
from PDVSA was news to GRENLEC management, as the GOG has not 
discussed with the electric company the possibility of it 
using PDVSA diesel to fuel its power plant. 
 
¶6. (C) The situation is similar in Dominica, where the 
Government has failed to discuss PDVSA supplying diesel to 
DOMLEC, that country's electric company, in which WRB 
Enterprises also has a majority share (ref C).  Blanchard 
explained to Poloff that both DOMLEC and GRENLEC could 
potentially put out tenders for new diesel supply contracts, 
but the new joint venture companies in Dominica and Grenada 
would have to compete with other bidders.  Unless the joint 
venture companies could underbid international oil companies, 
the electric utilities would prefer to stick with Texaco, 
their current supplier of diesel.  Of course, doing business 
in these small countries could require political compromises, 
added Blanchard. 
 
----------------------------------- 
OECS Has No Position on PetroCaribe 
----------------------------------- 
 
¶7. (U) Dominica's, Grenada's, and St. Kitts' separate 
initiatives to begin receiving Venezuelan petroleum products 
come shortly after the OECS member states' apparent failure 
to agree to negotiate as a bloc with Venezuela.  The regional 
press had reported that the OECS reached such an agreement 
during an April meeting, as well as that the member states 
agreed to establish a storage area for Venezuelan petroleum 
in Antigua during a meeting in June 14. 
 
¶8. (C) These reports were erroneous, according to Keith 
Nichols, who deals with energy issues at the OECS 
Secretariat, the organization's St. Lucia-based headquarters. 
 
SIPDIS 
 The Prime Ministers of the six OECS member states, Antigua 
and Barbuda, Dominica, Grenada, St. Kitts and Nevis, St. 
Lucia, and St. Vincent and the Grenadines, discussed both 
proposals but failed to reach agreement on either.  As a 
result, the OECS currently lacks a common position on 
PetroCaribe.  The member states apparently did attempt to 
hold a joint meeting with Venezuela, but this "did not come 
off" for various reasons.  There is still a possibility that 
the Antigua storage facility could be established, in 
Nichols' opinion.  (Note:  Post reported previously (ref A) 
that an oil company representative who attended the April 
OECS meeting understood that the organization had agreed to 
the Antigua storage facility proposal and was waiting for 
Venezuela's agreement.  End note.) 
 
------- 
Comment 
------- 
 
¶9. (C) The current flurry of activity by Eastern Caribbean 
governments to establish joint venture companies with 
Venezuela may be the result of the recent failure of the OECS 
to reach a common position regarding PetroCaribe.  Rather 
than operating as a bloc, each of the small countries in the 
region will go it alone in terms of how much of each type of 
fuel it receives from Venezuela and at what rate.  If the 
OECS and Venezuela ultimately establish a regional storage 
facility in Antigua, this could bring certain economic 
advantages.  But, as Post has reported (reftels), one of the 
major problems the small Eastern Caribbean governments face 
in implementing PetroCaribe is their inability to effectively 
and economically distribute the Venezuelan petroleum products 
once they arrive in their respective countries.  These 
governments still face the task of offering lower prices, 
applying political pressure, or a combination of both, to 
convince local businesses such as electric companies and 
gasoline stations to purchase the PetroCaribe fuel from their 
joint venture companies. 
KRAMER