R 272251Z MAR 09
FM AMEMBASSY BRASILIA
TO SECSTATE WASHDC 3914
INFO AMCONSUL RECIFE 
AMCONSUL RIO DE JANEIRO 
AMCONSUL SAO PAULO 
DOE WASHDC
NSC WASHDC

C O N F I D E N T I A L BRASILIA 000387 
 
 
CONFIDENTIAL 
 
FOR WHA A/S Shannon, WHA/BSC, EEB/ESC, NEA/IR 
FOR DOE CGAY, GWARD, RDAVIS 
 
E.O. 12958: DECL: 02/05/2019 
TAGS: ECON ENRG PREL PINR SCUL BR IR
SUBJECT: IRAN MAKES ENERGY OVERTURES IN BRAZIL 
 
REFTELS: A) Brasilia 304 B) Rio de Janeiro 42, C) Rio de Janeiro 
52,D) 08 Brasilia 1543 
 
Classified By: DCM Lisa Kubiske, Reason 1.4 (b) and (d) 
 
¶1. (C) Summary: Iranian Foreign Minister Manouchehr Mottaki, during 
his March 25 - 26 visit to Brazil, sought opportunities for creating 
energy partnerships with Brazil.  He was received cautiously by the 
Brazilian Ministry of Mines and Energy (MME) at a meeting in which 
they discussed many opportunities for building relationships, 
including possible commercial cooperation in fertilizers, electrical 
investments in third countries, energy investments by Iran in Brazil, 
and Brazilian energy projects such as hydropower in Iran.  The two 
sides also discussed the possibility of exchanging trade missions and 
presidential visits.  No agreements were reached.  The Ministry of 
Mines and Energy, though open to new ideas was "reticent" in their 
dealings with the delegation, noting that the Ministry of Foreign 
Relations would have to approve any relations between the two 
countries.  Iranian FM meetings with President Lula and FM Amorim 
will be reported septel.  END SUMMARY 
 
¶2. (C) Minister of Mines and Energy Edison Lobao received the 
visiting delegation of the Iranian Foreign Minister on March 25 and 
MME's Under Secretary for Petroleum, Gas, and Renewable Fuels, Jose 
Lima Neto, hosted a follow up meeting the next day.  International 
Affairs Advisor at MME, Helena Claudia Cantizano, attended both 
meetings and told Econoff that many possibilities were discussed but 
no agreements were reached.  The entire conversation from the MME 
side was caveated with the fact that any cooperation would require 
approval from the Ministry of External Relations (MRE) and Cantizano 
called the Brazilian tone "reticent."  She acknowledged that any 
conversations with the Iranians were quite complicated and implied 
that while MME was open to cooperating with the Iranians, they were 
conscious of sanctions and would be careful not to undertake any 
commitments without the approval of MRE. (NOTE: Cantizano spoke 
generally regarding "sanctions" without specifying whether she was 
referring to UN and/or US measures). She said that "MRE will set the 
limits . . . we will wait for a signal from them as to how to 
proceed."  (MRE meetings and others to be reported septel as 
information becomes available).  However, Cantizano reassured, "we're 
definitely not going to do anything nuclear with them!" 
 
¶3.  (C) During the meeting with Lobao, Cantizano reported, the 
Iranians pushed for more Petrobras involvement in Iran.  Lobao 
demurred, saying that the current structure required Petrobras to 
come in solely as a service provider which was not attractive when 
they were assuming the risk for exploration.  Lobao then indicated 
that for there to ever be any interest on the part of Petrobras in 
more operations in Iran, the Iranian constitution would have to be 
changed to allow for a different type of structure that would reward 
the risk inherent in oil exploration.  (Note: There is no indication 
this is in the offing and Petrobras CFO definitively confirmed to 
Ambassador Sobel in early March that Petrobras has no plans in Iran 
beyond fulfilling their current contracts - Reftel A.  Petrobras has 
previously indicated that they have no interest in expanding in Iran 
in part because it would not serve their business interests as a 
publicly traded company on the New York Stock Exchange.  There are no 
indications that if Iran made this constitutional adjustment that 
this would change Petrobras' position.  End note.)  Lobao offered 
that fertilizers might be a possible area of interest for Petrobras 
in Iran. 
 
¶3.  (C) The Iranians expressed their interest in the Brazilian 
electrical company Electrobras, particularly in Electrobras projects 
selling electricity to Brazil's neighbors.  The Iranians indicated 
that they have money to invest and would like to explore undertaking 
joint electricity projects in third countries.  They specified an 
interest in Africa (NOTE: Development in Africa is a primary interest 
of President Lula's and the GOB has advocated the United States and 
Brazil jointly pursuing energy development assistance in Africa under 
the auspices of our Biofuels MOU) and in particular indicated that 
Mauritania might be promising.  They also welcomed Brazilian 
development of energy projects in Iran, citing a specific interest in 
hydropower.  Further, the Iranians suggested they would like to 
invest in energy projects, specifically electricity generation, 
within Brazil.  Cantizano noted that since over 70 percent of the 
Iranian energy sector is state-owned, the Iranian delegation did not 
appear to have a concept of how a more liberalized energy sector 
operates.  They were apparently surprised to learn that electricity 
provision in Brazil is contracted via an auction process.  Lobao 
informed them that while it could be possible for Iran to explore 
investing in Brazil's electrical sector, any contracts to provide 
electricity would be handled through the auction process and there 
are no guarantees of the outcome. 
 
¶4.  (C) The two sides then discussed the possibility of future 
exchanges.  The Foreign Minister invited Lobao to 
visit Iran and Lobao responded that he would need to check his 
calendar.  They then expressed mutual interest in a Presidential 
visit, either in Iran or Brazil (Note: according to ref D, Mottaki's 
reciprocal visit was a necessary precursor to a presidential meeting. 
 End note).  They also discussed the possibility of exchanging trade 
missions, which Brazil noted would have to be decided by MRE. 
 
¶5.  (C) Cantizano reports that the meeting with Jose Lima Neto the 
following day was a repeat of the previous day's conversation with 
the added detail that Iran would send a follow up letter to detail 
their interests in a possible trade mission, specifically what 
sectors they would hope to receive in Iran and possibly send to 
Brazil. 
 
¶6.  (C) COMMENT: Cantizano conveyed the impression of a less than 
completely professional approach on the part of the visiting Iranian 
delegation.  She notes that although MME had requested an agenda for 
the meetings, the Iranians never followed through on promises to 
provide one.  After having requested that MME make an appointment for 
them with Electrobras in Rio, which MME did, the Iranians never 
showed up for the appointment.  (Note: according to Iranian press 
reports, the delegation flew to Caracas after their meetings in 
Brasilia). The fact that this meeting with the Brazilian Energy 
Minister took place, rather than any expectation on either side of a 
substantive result, may have been the desired policy outcome from 
both GOB and Iranian perspectives. Brazil has been very careful to 
adhere to all UN sanctions and we believe they will continue to do 
so. Readouts from MRE and Planalto meetings will provide important 
context and will be provided septel. END COMMENT. 
 
SOBEL