VZCZCXRO7595
PP RUEHDE RUEHRG
DE RUEHBR #0544 0871100
ZNY CCCCC ZZH
P 281100Z MAR 07
FM AMEMBASSY BRASILIA
TO RUEHC/SECSTATE WASHDC PRIORITY 8503
INFO RUEHRG/AMCONSUL RECIFE 6421
RUEHRI/AMCONSUL RIO DE JANEIRO 4095
RUEHSO/AMCONSUL SAO PAULO 9495
RUEHDE/IRAN RPO DUBAI
RUEHKB/AMEMBASSY BAKU 0002
RHEHNSC/NSC WASHDC
RHEBAAA/DOE WASHDC
RUEHCV/AMEMBASSY CARACAS 3651

C O N F I D E N T I A L BRASILIA 000544 
 
SIPDIS 
 
SIPDIS 
 
NSC FOR FEARS 
STATE FOR EB/ESC AND NEA 
 
E.O. 12958: DECL:03/26/17 
TAGS: ETTC EPET EINV BR IR
SUBJECT: BRAZIL: PETROBRAS AND IRAN 
 
REF: A) STATE 22311 
 
      B) 06 RIO 0445 
      C) 05 RIO 0615 
 
Classified by Ambassador Clifford Sobel, reasons 1.4 (b) and (d). 
 
¶1. (C) Summary: Drawing on ref A, the Ambassador raised USG 
concerns over potential Petrobras investments in oil and gas 
exploration in Iranian waters on the Caspian Sea with Energy 
Minister Silas Rondeau, Petrobras Southern Cone Manager Deccio 
Oddone and Foreign Ministry Under Secretary for Political 
Affairs Everton Vargas in a series of meetings March 25 and 26. 
These meetings followed up on an August 22, 2006 one-on-one 
conversation with Petrobras President Sergio Gabrielli in which 
the Ambassador made the same points.  Our interlocutors 
acknowledged the seriousness of the issue to the international 
community and, although they did not say Petrobras would halt 
its Petrobras activities in Iran, they did make it clear that 
they understand the sensitivity of the political moment. 
Gabrielli also stated that Petrobras investments would not 
exceed Iran Sanctions Act limits over the next two years.  End 
Summary. 
 
¶2. (C) At an August 22, 2006 meeting with the Petrobras 
President and CEO Sergio Gabrielli (ref B) the Ambassador 
underscored with Gabrielli the importance of not investing in 
Iran, and particularly not at this moment, when Iran was defying 
the international community's efforts to stop uranium enrichment 
activities.  Gabrielli responded that he understood the U.S. was 
exerting pressure on other countries, including Japan, to not 
proceed with significant investments in Iran at this time.  He 
added that he understood that Japan had deferred its planned 
investment as a result.  Gabrielli affirmed that Petrobras' 
investments in Iran over the next two years would not exceed the 
Iran Sanctions Act (ISA) ceiling.  However, he emphasized that 
Petrobras believes it is important to build up a presence in 
Iran in hopes of improving its international position in the 
long-term trade.  He expected any future investments to be 
focused on deep-water exploration and production, which were 
Petrobras' strengths.  Gabrielli argued that were Petrobras or 
other major international energy companies not to invest, it 
would simply open the door for Chinese investment in Iran.  The 
Ambassador closed the meeting by underscoring that, particularly 
with sanctions pending before the UNSC, it was important that 
the international community send a unified message to the 
Iranian regime by not pursuing investment in Iran. 
 
¶3. (C) In a March 26, 2007 meeting, Minister of Mines and Energy 
Silas Rondeau -- who sits on the Board of Directors of the 
partially privatized parastatal -- told the Ambassador that 
Petrobras and the GoB understood that this was a "cautious 
moment" for the international community with regard to Iran. 
While Petrobras believed it was in its interest to open up new 
investment horizons, he understood that the GoB must also take 
into account the concerns of its strategic partners as it 
proceeded, and the U.S. was still Brazil's biggest strategic 
partner. 
 
¶4. (C) In separate meetings with Petrobras Southern Cone 
Director Oddone and Itamaraty Under Secretary for Political 
Affairs Vargas, the Ambassador was assured that Petrobras and 
the GoB, respectively, took seriously USG concerns over Iran. 
 
SOBEL