VZCZCXYZ0014
RR RUEHWEB

DE RUEHMU #0639/01 0682306
ZNR UUUUU ZZH
R 092306Z MAR 07
FM AMEMBASSY MANAGUA
TO RUEHC/SECSTATE WASHDC 9409
INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE
RUEHCV/AMEMBASSY CARACAS 1000
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RHEBAAA/DEPT OF ENERGY WASHINGTON DC

UNCLAS MANAGUA 000639 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR WHA/CEN, WHA/EPSC, EEB/ESC 
 
E.O. 12958: N/A 
TAGS: ENRG EPET EAID NU VE
SUBJECT: NICARAGUA - VENEZUELA MEMORANDUM OF UNDERSTANDING 
ON ENERGY SECTOR COOPERATION BETWEEN PDVSA AND PETRONIC 
 
¶1. (SBU) Summary. As part of a series of Bolivarian 
Alternative agreements between Nicaraguan and Venezuela 
signed on January 11, 2007, respective Foreign Relations 
Ministers signed a Memorandum of Understanding for Energy 
Sector Cooperation between Petroleos de Venezuela (PDVSA) and 
La Empresa Nicaraguense Del Petroleo (PETRONIC).  The MOU 
outlines areas for cooperation between PDVSA and PETRONIC, 
including the formation of joint enterprises engaged in 
refining, distribution, supply, and marketing petroleum 
products, the supply of petroleum and refined products, the 
construction of a refinery in Nicaragua, and the direct 
supply of gas from Venezuela to Nicaragua via pipeline. End 
Summary. 
 
¶2. (SBU) The MOU for Energy Sector Cooperation between the 
Venezuelan Oil Company (PDVSA) and the Nicaraguan Oil Company 
(PETRONIC) was one of a series of thirteen commitments with 
Venezuela negotiated by the Ortega government before it came 
to power on January 10, 2007. 
PETRONIC President Jose Francisco Lopez and PDVSA President 
Rafael Ramirez Carreno signed the MOU on January 11, 2007. 
The substance of the MOU, along with the other commitments 
made that day, was kept from the public for weeks.  This 
cable reports on an unsigned copy of the MOU. 
 
Preambular Language 
------------------- 
¶3. (SBU) Preambular language recognizes the importance of the 
expansion and intensification of social and economic 
cooperation between the parties, in consideration of the 
opportunities that the energy sector offers for cooperation 
with a major emphasis on the social development.  The parties 
reiterate their political will and interest in encouraging 
regional energy integration, based upon the principles of 
cooperation, complementarity, self-determination, shared 
solidarity between peoples, respect for sovereignty, and the 
sovereign right to establish criteria that assure the 
utilization of renewable and non renewable natural resources 
for the equitable and sustainable development of their 
peoples. 
 
Article 1: Objective 
-------------------- 
¶4. (SBU) The objective of this MOU is to establish a general 
framework for the execution of cooperative activities of 
mutual interest to PDVSA and PETRONIC in the area of energy. 
 
Article 2: Modalities 
---------------------- 
¶5. (SBU) With the purpose to put into practice what is 
foreseen in Article 1, the parties agree to deepen mutual 
cooperation with a view to continuing the advancement of 
studies and strategies that may be required to realize 
development in the following areas: 
 
-- formation of mixed enterprises between state enterprises 
for the development of refining, distribution, supply, and 
marketing projects for petroleum products, and other 
objectives of common agreement between the parties. 
 
-- construction of a refinery in the territory of the 
Republic of Nicaragua, with the participation of PDVSA and 
PETRONIC. 
 
-- direct supply of gas to the Republic of Nicaragua via land 
through a pipeline. 
 
-- supply of petroleum and refined products up to the volumes 
agreed upon by the parties and established mechanisms for 
payment. 
 
-- other forms of cooperation that the parties may agree. 
 
Article 3: Competent Authorities 
-------------------------------- 
¶6. (SBU) Competent authorities for the execution of this MOU 
shall be PDVSA and PETRONIC. 
 
Article 4: Control and Oversight 
-------------------------------- 
¶7. (SBU) With the purpose of assuring the prompt execution of 
this MOU and in as much as agility is required in making 
decisions, officials of the competent authorities will meet 
alternatively in the territories of the parties on dates that 
they decide by common agreement.  In this way, executive 
working groups may be established to effect cooperative 
 
relations in the different sectors. 
 
Article 5: Utilization of Information 
------------------------------------- 
¶8. (SBU) The parities may freely utilize all information 
exchanged by virtue of this MOU, except that which a party 
restricts or places reservations for use or dissemination, or 
has classified as confidential.  In no case will information 
exchanged by virtue of this MOU be transferred to third 
parties without prior written consent by the relevant party. 
 
Article 6: Financing 
-------------------- 
¶9. (SBU) Parties agree that expenses resulting from defined 
cooperative activities will be born by the party that incurs 
them, through its competent authority, unless another so 
agreed in writing. 
 
Article 7: Labor Relations 
-------------------------- 
¶10. (SBU) Personnel commissioned by each party will continue 
under the direction of the institution to which they belong, 
so as to not create relations of a labor character with the 
other party.  They shall work under the norms and regulations 
of the institutions from which they are lent.  Such staff 
will not be able to dedicate themselves to any activity 
outside of their functions, nor receive remuneration beyond 
what is established without prior authorization from the 
competent authorities.  Each of the parties is responsible 
for labor accidents and damages to their own property, 
independent of the place where it occurs, unless it is a 
consequence of grave negligence or hurtful conduct, in which 
case corresponding indemnities should provide cover. 
 
Article 8: Third Parties 
------------------------ 
¶11. (SBU) This MOU does not confine the parties to any 
exclusivity, nor does it impede signing other agreements of 
this type with third parties. 
 
Article 9:  Modifications and Termination 
----------------------------------------- 
¶12. (SBU) This MOU may not be terminated, modified, or any 
article omitted, without previous written consent indicated 
by both parties. 
 
Article 10: Resolution of Disputes 
---------------------------------- 
¶13. (SBU) Disputes that may arise with because of 
interpretation or the application of this MOU will be 
resolved by the parties in a friendly manner through direct 
negotiations and common agreement. 
 
Article 11: Duration, Entry into Force, and Withdrawal 
--------------------------------------------- --------- 
¶14. (SBU) The duration of this MOU will be 5 years after 
having entered into force upon signature, without lessening 
fulfillment of constitutional and internal legal requirements 
that each country may have.  This MOU will remain in force 
unless one of the parties communicates to the other its 
intention to terminate it at least 6 months before the 
expiration of the agreement.  The termination of this MOU 
does not imply the cessation of agreed upon projects during 
the period within which this agreement was in force, which 
may be executed until their culmination unless the parties 
agree to the contrary.  This MOU may be amended by mutual 
consent of the parties; amendments will enter into force in a 
form agreed upon by the parties. 
TRIVELLI