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R 311705Z AUG 09
FM AMEMBASSY BRASILIA
TO SECSTATE WASHDC 4976
NSC WASHDC
DEPT OF ENERGY WASHDC
DEPT OF COMMERCE WASHDC
INFO AMCONSUL SAO PAULO 
AMCONSUL RIO DE JANEIRO 
AMCONSUL RECIFE 
AMCONSUL LAGOS

C O N F I D E N T I A L BRASILIA 001092 
 
 
CONFIDENTIAL 
 
NSC FOR GARY SAMORE, RACHEL WALSH, LUIS ROSELLO, JOYCE CONNERY 
DOE FOR ED MCGUINESS, GARY WARD, RUSS ROTH 
COMMERCE FOR ITA/MAC/ANNE DRISCOLL, LORRIE FUSSELL 
DEPT PASS EXIM FOR JOHN MORAN 
DEPT PASS TDA FOR NATHAN YOUNGE 
DEPT FOR WHA/FO, WHA/EPSC, WHA/BSC 
DEPT ALSO FOR EEB MATT MCMANUS, BRIAN DUGGAN 
 
E.O. 12958: DECL: 08/13/2019 
TAGS: ENRG EINV SENV PREL MNUC BR NI
SUBJECT: HIGH LEVEL ENERGY DICUSSIONS IN BRAZIL REVEAL OPPORTUNITIES 
 
REF: A)Brasilia 304, B) Brasilia 387, C) Rio 052, D) Rio 051, 
E)Brasilia 765, F)Rio 014, G)Brasilia 253, H)862 Brasilia, I) 
Brasilia 809 
 
Classified By: Charge d'Affaires Lisa Kubiske, for reasons 
1.4 (b) and (d). 
 
¶1. (SBU) SUMMARY: High-level U.S. policy makers explored 
opportunities for bilateral energy cooperation with Brazil, ranging 
from oil exploration to civilian nuclear power, in multiple meetings 
during the week of August 4 - 8. White House National Security 
Advisor General Jones discussed with the Energy Minister and the 
Presidential Chief of Staff the importance of bilateral cooperation. 
Chief of Staff Dilma Rousseff called this a moment of opportunity for 
building close relations, and, having previously suggested to other 
interlocutors that we should have a strategic dialogue on energy, 
cited energy as a primary component of enhanced relations.  General 
Jones also explored Petrobras' position in Iran and possible 
cooperation in Nigeria.  He heard from Petrobras executives of missed 
opportunities for U.S. companies, with CEO Gabrielli saying that 
Petrobras wants and needs U.S. cooperation in exploring Brazil's 
promising pre-salt oil reserves, but finds partnering with the United 
States difficult and cumbersome.  They discussed a possible follow up 
meeting to bring in more U.S. commercial interests.  NSC's Dr. Gary 
Samore met with the Ministry of External Relations (MRE) to discuss 
the formation of a bilateral energy commission at the Department of 
Energy Deputy Secretary level, an idea that was met with great 
enthusiasm.  The Ministry now awaits a draft proposal. MRE also 
confirmed Brazilian interest in working with the NRC to cooperate on 
regulatory matters.  Samore got readings on Brazil's long term 
civilian nuclear energy plans from both MRE and Rio nuclear sector 
leaders.  He also heard further detail on some Brazilian interests 
for nuclear cooperation and insight into U.S. commercial prospects as 
Westinghouse prepares to bid for the planned contracts for 4 - 8 new 
nuclear plants. With these visits and reciprocal visits by Brazilian 
Energy officials to Washington (Septel), we have developed an 
extensive list of possible opportunities for energy cooperation. 
What remains to be done now is to select the most promising 
possibilities and define a path forward.  END SUMMARY 
 
JONES - Ministry of Mines and Energy (MME) 
------------------------------------------- 
¶2. (C) At MME, General Jones received a complete briefing on the 
energy sector in Brazil, led by Minister Edison Lobao and Deputy 
Minister Marcio Zimmermann, with multiple industry and governmental 
energy sector leaders in attendance, many having flown in from Rio. 
General Jones expressed U.S. interest in cooperation with Brazil in 
the energy sector.  Responding to General Jones' question on 
operations in Iran, Petrobras CEO Sergio Gabrielli said Petrobras 
explored two dry wells in Iran and is now terminating exploratory 
activity, although a small office is being left open.  (see reftels 
A-C)  Turning to Nigeria, Jones cautioned that the country risks 
becoming a failed state in less than 10 years, with ramifications for 
both public and private investment.  Though Gabrielli observed that 
Petrobras's investment in Nigeria is far off-shore, General Jones 
pointed out that a Shell platform had been attacked 100 miles 
off-coast.  General Jones noted the importance of leadership of oil 
companies in staving off potential collapse and invited Petrobras to 
participate in that effort.  Gabrielli made no commitment. 
 
¶3. (SBU) In a smaller pull aside immediately following, Gabrielli 
told General Jones that Petrobras wants and needs U.S. cooperation in 
exploring Brazil's promising pre-salt oil reserves, but too often 
dealing with U.S partners, such as Exim Bank, involves a lot of 
paperwork and slow response.  Petrobras is attracting investment from 
China, Canada, France, Norway and others.  In Gabrielli's judgment 
the United States is under-represented (Reftel D and F).  Petrobras' 
CFO Barbossa said Petrobras' planned capital expenditure of USD 174 
billion offers "lots of opportunity," as well as more indirect 
investment through the supply chain that supports Petrobras.  He 
advocated opening new ways of cooperating, extending credit, working 
with the Brazilian national development bank BNDES, etc.  Barbossa's 
assessment was that it will take too long to access the USD 10 
billion offered by Exim and still not fulfill all the needs. 
Ambassador Sobel's suggestion that Petrobras host a set of meetings 
for a group of 3-4 major US companies, headed on the U.S. side by NSC 
Deputy Director Michael Froman or other senior USG official, was well 
received by all in attendance. 
 
Jones with Dilma Rousseff - "Moment of Opportunity" for Energy 
-- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- 
¶4. (C) Presidential Chief of Staff, and President Lula's preferred 
choice as a successor, Dilma Rousseff, raised what she called her 
"favorite subject," energy, in a separate meeting with General Jones. 
 Responding to General Jones' stated desire to ensure the Brazilian 
energy community has the right U.S. counterparts to move energy 
cooperation forward, Rousseff concurred these ties are extremely 
important.  She cited specifically the need for goods and services to 
support the exploitation of pre-salt oil reserves.  She pointed out 
that Brazil is moving closer to operationalizing these reserves and 
in fact the committee developing the new regulatory framework was set 
to present its proposal to President Lula the following day, August 
¶6.  (Note: The report is due to be made public August 31) (Reftel E). 
Saying it is "frightening" when Brazil has relatively closer 
relations with other countries than with the United States, given the 
historic relationship between our two nations, she called this a 
moment of opportunity for building close relations.  She highlighted 
biofuels, nuclear, and hydropower as significant areas of 
opportunity.  To build on these areas of opportunity, Ambassador 
Sobel noted that in a meeting on July 30, the head of Brazil's 
national development bank, BNDES, and the Head of Exim Bank discussed 
new ways to work together on projects with input from both sides, 
including possible joint financing for projects in Sub-Saharan 
Africa. 
 
Samore at MRE - U/S Amado 
-------------------------- 
¶5.  (C) On August 7, WMD Coordinator and Special Advisor to the 
President, Dr. Gary Samore, met with the MRE Under Secretary for 
Energy and High Technology Andre Amado to discuss civilian nuclear 
energy cooperation.  Amado, opining on the Brazilian civilian nuclear 
energy program, speculated that any significant decisions regarding 
the contracting of 4 - 8 new nuclear plants would probably be delayed 
until after the 2010 Presidential election, particularly since site 
selection for the new plants would be greatly complicated by election 
year politics.  Additionally, financing and the type of technology to 
seek are questions to be resolved.  "There are a few key people with 
differing positions.  We have to get our act together."  He confirmed 
that he sees the eventual goal as producing reactors domestically (a 
statement at odds with the view expressed by the President of 
Brazil's Nuclear regulatory body, para 9).  Regarding nuclear waste, 
he acknowledged "we know we have to deal with it," but "it's not a 
pressing problem."  He offered that technology transfer will be a key 
issue in contracting. 
 
¶6.  (SBU) Dr. Samore explored increasing cooperation through a 
bilateral commission on energy with a heavy nuclear focus, to be 
headed on the U.S. side by Deputy Energy Secretary Daniel Poneman. 
Amado was enthusiastic.  DOE's Deputy Assistant Secretary for Global 
Partnership in Nuclear Energy Ed McGuiness pointed out that DOE is 
better positioned than ever to cooperate on nuclear issues and to 
leverage technology expertise in our national labs, including small 
to medium reactors.  The idea of a commission would elevate the 
concept of a working group that has been previously explored for 
technical cooperation and help align the policy with the technology. 
McGuiness also highlighted the role Exim can have in financing, how 
the USG can help bring in suppliers on the nuclear side, how we can 
cooperate on R&D, development of human capital, light water reactors, 
and exchange of experts from Oak Ridge labs. Samore repeated the idea 
of an exchange with MOD Chief of Staff Murilo Barbosa, who expressed 
interest and suggested that Samore tour a Brazilian navy nuclear 
factory on his next visit to Brazil. 
 
¶7.  (C) Amado was interested but cautioned wariness of institutional 
infighting.  Amado said that it is not clear who is in charge of 
specific nuclear issues even within his own Ministry (Note: Amado 
occupies a newly created position which has very recently added a 
nuclear section, apparently one factor in said infighting. End Note). 
 To avoid pitfalls, Amado offered to be the conduit to pass along 
initiatives to very specific working groups in the other ministries. 
Econoff noted that to take advantage of DAS McGuiness' presence, the 
Embassy was seeking meetings with MME and the Ministry of Science and 
Technology to discuss the idea in more detail with the technical 
agencies.  (Note: Time did not permit the scheduling of such meetings 
but MME in particular was very open to the idea.  More important was 
the signal to MRE that there would be direct communication on this 
issue between the technical agencies).  Dr. Samore committed to send 
a proposal further outlining the idea.  Dr. Samore also raised 
cooperation between the GOB and the Nuclear Regulatory Commission. 
Amado noted GOB interest, said it was a workable idea, and Brazil has 
a clear interest in going ahead. 
 
Samore Visits Nuclear Experts in Rio 
------------------------------------- 
 
¶8.  (SBU) In Rio, Dr. Samore met with Brazilian Nuclear Energy 
Commission (CNEN) President Odair Dias Goncalves.  Discussing 
bilateral cooperation, Goncalves noted that CNEN is reviewing its 
goals on all bilateral cooperation, to focus on: 1) developing a new 
research reactor, 2) storage of medium and low level radioactive 
waste, 3) gaining public acceptance of long-term waste storage, and 
4) establishing a new nuclear regulatory agency separate from CNEN, a 
process which has already begun. In response to Dr. Samore's 
suggestion that the U.S. and Brazil establish a special energy 
commission, Goncalves observed that CNEN does not have sufficient 
independent resources for exchanges that an energy commission would 
entail.  (Note: there are other parts of the GOB that potentially 
could engage in such exchanges.  End Note.) 
 
¶9.  (SBU) Regarding Brazil's broad nuclear plans, Goncalves said that 
in spite of the GOB's strategic plan to increase nuclear power to 5 
percent of the Brazilian energy matrix by 2030, CNEN is not striving 
for excess nuclear capacity; has no plans to export yellow cake; and 
has very little interest in developing reactor indigenous technology. 
Of the latter, Goncalves said "It's not the best business in the 
world." 
 
¶10.  (C) Electronuclear President Othon Pinheiro separately told Dr. 
Samore that in the pending development of the civilian nuclear energy 
sector, he believed that Electronuclear would be best served by a 
public-private partnership to sell energy (51 percent government, 49 
percent private would be ideal).  Pinheiro also praised Westinghouse 
as the strongest competitor for the 4 - 8 new reactors Brazil plans 
to contract due to Westinghouse's safety record and the 
characteristics of the Brazilian grid. 
 
¶11. (C) COMMENT:  This series of meetings builds on several recent 
high level consultations to explore the most promising areas for 
U.S.-Brazilian energy cooperation.   A next step will be for Post to 
meet with Brazilian officials further explore the many excellent 
possibilities and to hear GOB Ministries' wish lists on cooperation 
now that they are more aware of what we have to offer (this meeting 
has been postponed until September 9).  With that list in hand, 
policy makers on both sides can begin to refine how exactly we choose 
to cooperate.  It will be important to work with MRE, a central 
partner in this effort, but we will want to be careful to maintain 
independent links to the technical agencies involved to allow for 
ease of coordination and the most effective exchange of information. 
Post would welcome the chance to comment on the proposal for a 
bilateral commission.  Based on Dr. Samore's meetings, it is clear 
that cooperation on civilian nuclear energy stands to be a central, 
and very positive, aspect of any future U.S.-Brazil bilateral energy 
partnership. END COMMENT 
 
¶12.  (U) This cable was cleared with the respective delegations and 
coordinated with AmConsulate Rio. 
 
KUBISKE