VZCZCXRO0022
RR RUEHHM
DE RUEHHI #2642/01 2890926
ZNR UUUUU ZZH
R 160926Z OCT 06
FM AMEMBASSY HANOI
TO RUEHC/SECSTATE WASHDC 3718
INFO RUEHHM/AMCONSUL HO CHI MINH 1997
RUEHCV/AMEMBASSY CARACAS 0010
RUEHUB/USINT HAVANA 0006
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEHRC/DEPT OF AGRICULTURE WASHINGTON DC
RUEAIIA/CIA WASHINGTON DC

UNCLAS SECTION 01 OF 02 HANOI 002642 
 
SIPDIS 
 
STATE FOR EAP/MLS AND EB/TPP/BTA/ANA 
STATE PASS USTR DAVID BISBEE 
COMMERCE FOR 4431/MAC/AP/OPB/VLC/HPPHO 
TREASURY FOR OASIA 
 
SENSITIVE BUT UNCLASSIFIED 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON ENRG OVIP EINV VE VM
SUBJECT: VIETNAM REACHING OUT TO VENEZUELA AND CUBA ON ENERGY 
 
SENSITIVE - DO NOT POST ON INTERNET 
 
¶1. (SBU) Summary and Comment: Recent news reports have indicated 
that Vietnam has signed a series of energy deals with Venezuela and 
Cuba.  According to a GVN official, such Memoranda of Understanding 
(MOUs) are in line with the GVN's policy to seek more oil resources 
and partners outside of Vietnam in order to meet the country's 
increasing energy needs.  Vietnam has only signed MOUs to explore 
the contracts, and commercial considerations would be the primary 
factors in the GVN's decisions.  The timing of the Venezuela deals 
coincide with Venezuela's attempt to gain a seat on the UN Security 
Council (UNSC).  Despite Venezuela's efforts to curry Vietnam's 
favor for its UNSC bid, MFA officials have assured us on several 
occasions that Vietnam has a vote-trading arrangement with 
Guatemala.  End Summary and Comment. 
 
¶2. (SBU) Econoff met with Deputy Director Nguyen Xuan Dinh of the 
Ministry of Interior's Department of Energy and Petroleum on October 
13 to inquire about recent news reports that Vietnam had signed a 
series of energy deals with Venezuela and Cuba.  According to media 
reports, on October 6 Venezuela President Hugo Chavez announced 
plans to build a USD 2.1 billion refinery in Vietnam using funds 
earned from Venezuela's recent sale of its Lyondell-Citgo refinery 
in Texas.  The reports said Vietnam's state-owned oil and gas firm 
PetroVietnam would also cooperate with Venezuela's state oil company 
PDVSA to certify and quantify the reserves in Venezuela's Orinoco 
belt.  Other news reports stated that while in Cuba, Vietnamese 
officials entered a partnership with Cubapetroleo for oil 
exploration in the Gulf of Mexico. 
 
¶3. (SBU) When asked for details of these deals, Dinh explained that 
these were "only" MOUs to explore contracts and that commercial 
considerations would be the primary factors in the GVN's ultimate 
decisions.  He added that these MOUs are in line with GVN policy to 
seek more oil resources and partners for exploration outside of 
Vietnam in order to meet the country's increasing energy needs.  The 
GVN currently has seven contracts abroad, including in Malaysia, 
Algeria, Indonesia, Mongolia and Russia, and is exploring new 
contracts with Kazakhstan, Cuba and Venezuela.  "This is normal 
cooperation between countries," he said, adding that the GVN is also 
trying to expand deep water production in its own territories.  Dinh 
adamantly asserted that political considerations played no role in 
the agreements. 
 
¶4. (SBU) In regard to Chavez' statement on plans to build a refinery 
in Vietnam, Dinh said that officials from Venezuela's PDVSA will 
come to Vietnam in December to discuss terms and conditions.  Dinh 
was at pains to emphasize that Vietnam has an "open door policy for 
every country and company" in regard to investment, and that PDVSA 
would be treated no differently than any other potential investor in 
Vietnam.  Vietnam is now adjusting the scope of work for new 
refineries and PDVSA would be free to accept or reject the terms. 
"It depends on PDVSA's offer," he said.  "But we are also waiting 
for American firms to bid on contracts in Vietnam.  We don't care 
about the name of the company or country.  It is the economic 
substance that matters." 
 
¶5. (SBU) As for the Cuba MOU on exploration and production, Dinh 
said the GVN would be examining available geological data and 
bidding criteria.  "It depends on the potential of the block that 
Cuba offers to PetroVietnam," he said. 
 
¶6. (SBU) Comment: The timing of the Venezuela deal coincides with 
Venezuela's attempt to gain a non-permanent seat on the UN Security 
Council.  Despite Venezuela's efforts to curry Vietnam's favor for 
its UNSC bid, MFA officials have assured us on several occasions 
that Vietnam has a vote-trading arrangement with Guatemala.  The 
MOUs also shed light on the way Vietnam's "friends towards all" 
foreign policy relates to its economy.  Vietnam's energy needs are 
growing, and the country is searching for energy partners.  It may 
be that because of their government's particular circumstances and 
ambitions, the state oil firms of Venezuela and Cuba are willing to 
come to the table with terms that are, for Vietnam, more favorable 
than those offered by their European and U.S. counterparts.  End 
Comment. 
 
¶7. (SBU) Background:  With daily output of 350,000 barrels per day, 
Vietnam is the third largest crude oil producer in Southeast Asia 
after Indonesia and Malaysia.  Crude oil currently accounts for 22 
percent of Vietnam's exports.  The Ministry of Trade recently 
 
HANOI 00002642  002 OF 002 
 
 
drafted an export plan, however, which sees crude oil exports 
falling to 15.6 million tons in 2010 from 18.7 million tons in 2006 
because Vietnam will increasingly use its crude oil resources once 
it establishes refining capacity.  Vietnam's first oil refinery, in 
central Quang Ngai Province, is expected to come on line in early 
¶2009. 
 
MARINE