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Viewing cable 09CARACAS1017, VENEZUELA: REPSOL EMPLOYEE COMMENTS ON DRILLING

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Reference ID Created Released Classification Origin
09CARACAS1017 2009-08-05 18:06 2011-01-27 21:09 CONFIDENTIAL Embassy Caracas
VZCZCXRO5596
RR RUEHDE RUEHDH
DE RUEHCV #1017 2171808
ZNY CCCCC ZZH
R 051808Z AUG 09
FM AMEMBASSY CARACAS
TO RUEHC/SECSTATE WASHDC 3501
INFO RUEHHH/OPEC COLLECTIVE
RUEHAC/AMEMBASSY ASUNCION 1027
RUEHBO/AMEMBASSY BOGOTA 8034
RUEHBR/AMEMBASSY BRASILIA 6168
RUEHLP/AMEMBASSY LA PAZ 2920
RUEHPE/AMEMBASSY LIMA 1201
RUEHMD/AMEMBASSY MADRID 3246
RUEHSP/AMEMBASSY PORT OF SPAIN 3747
RUEHQT/AMEMBASSY QUITO 3015
RUEHSG/AMEMBASSY SANTIAGO 4145
RUEHDG/AMEMBASSY SANTO DOMINGO 0673
RUEHUB/USINT HAVANA 1048
RHEHNSC/NSC WASHDC
RHEHAAA/WHITEHOUSE WASHDC
RHEBAAA/DEPT OF ENERGY
RUCPDOC/DEPT OF COMMERCE
RUEATRS/DEPT OF TREASURY
RUMIAAA/HQ USSOUTHCOM MIAMI FL
C O N F I D E N T I A L CARACAS 001017 
 
SIPDIS 
 
ENERGY FOR ALOCKWOOD AND LEINSTEIN, DOE/EIA FOR MCLINE 
HQ SOUTHCOM ALSO FOR POLAD 
TREASURY FOR MKACZMAREK 
COMMERCE FOR 4332/MAC/WH/JLAO 
NSC FOR RKING 
 
E.O. 12958: DECL: 08/04/2019 
TAGS: EPET EINV ENRG ECON CU VE
SUBJECT: VENEZUELA: REPSOL EMPLOYEE COMMENTS ON DRILLING 
OFFSHORE CUBA/VENEZUELA 
 
REF: A. (A) 05 CARACAS 2807 
     B. (B) CARACAS 239 
     C. (C) CARACAS 853 
 
Classified By: Economic Counselor Darnall Steuart, for reasons 
1.4 (b) and (d). 
 
1. (C) XXXXXXXXXXXXX , Repsol 
Drill Project Manager for the Rafael Urdaneta offshore 
natural gas exploratory well told Petroleum Attache on August 
2 that Repsol had cancelled plans to drill in Cuba, as it had 
been unable to secure an offshore drill rig with less than 
fifteen percent U.S. content. 
 
2. (C) XXXXXXXXXXXXX added that the Spanish oil company has 
experienced several challenges over the last month in its 
Urdaneta drill program.  XXXXXXXXXXXXX shared that PDVSA recently 
seized vessels in the Gulf of Venezuela owned by Venezuelan 
launch company Terminales Maracaibo that had been servicing 
the off-shore rig.  The service company has the contract to 
provide Chevron, Repsol, and Teikoku with launch services in 
the Gulf to transport crew and supplies to the rig. 
Terminales Maracaibo continued to operate vessels not 
expropriated in May 2009 until PDVSA recently expanded the 
scope of the expropriation beyond assets physically located 
on Lake Maracaibo.  XXXXXXXXXXXXX indicated that Repsol has not 
been able to find a replacement launch company (as there are 
few private launch companies left in Venezuela) and is 
increasingly reliant on PDVSA to provide launch services to 
maintain its drilling program. 
 
3. (C) XXXXXXXXXXXXX also noted that during the first week of 
drilling, the rig was shut down for 36 hours due to a 
shortage of diesel fuel.  The rig temporarily shut down again 
the weekend of August 1 due to another fuel shortage. 
Problems within PDVSA's domestic fuel distribution system are 
driving this problem.  (NOTE: The GBRV nationalized the 
downstream oil sector, including tanker trucks and gas 
stations in September 2008, and has slowly integrated private 
tanker trucks into its fleet.)  XXXXXXXXXXXXX shared that Repsol 
had been unable to lease some specialized drill tools from 
Schlumberger as it had exported them out of Venezuela and was 
not willing to bring them back.  XXXXXXXXXXXXX stated that Repsol 
had also encountered some technical difficulties with the 
drilling program (NFI).  Based on current progress, XXXXXXXXXXXXX 
believes Repsol will complete its exploratory well within the 
next four to six weeks. 
 
4. (C) XXXXXXXXXXXXX noted that Japan's Teikoku has offered jobs to 
Repsol's entire senior drilling team, asking them to transfer 
with the drill rig from Repsol.  Teikoku has drill engineers 
preparing its exploratory well in the Moruy II block, but has 
not put into place a management team to execute the program 
(e.g. project supervisor, operations manager, drill rig 
supervisor, etc.). 
 
5. (C) COMMENT: Repsol's problems in securing launch vessels 
and diesel fuel underscore some of the unintended 
consequences of GBRV nationalizations of downstream 
operations and the oil services sector.  Its inability to 
secure specialized drill tools from Schlumberger confirms 
reports that companies are quietly removing capital equipment 
from Venezuela.  END COMMENT. 
 
DUDDY