B7 A memorandum of understanding (MOU) for the development of the Junin 5 extra heavy oil block in the Orinoco heavy oil belt (and the creation of a mixed company (60% PDVSA/40% Eni).
o The mixed company expects to produce approximately 240,000 b/d of extra heavy crude (8.5B0 API).
B7 An MOU to create a mixed company to refine production from Junin 5 and the PetroMonagas joint venture (a 60-40 split mixed company involving PDVSA and BP) (350,000 b/d) with an investment of $9.3 billion. The basic engineering would begin this year with operational startup slated for 2016.
B7 An MOU for the development of a 1,000 MW combined cycle power plant at the CIGMA complex in Guiria.
B7 An MOU on the transfer of proprietary Eni heavy oil production technology.
B7 Maccotta disputed press reports that Eni had paid a $646 million bonus to PDVSA, saying that Eni had agreed to a $300 million bonus, which will not actually be paid given that PDVSA owes Eni nearly $1 billion.
Maccotta speculated that once these projects move forward, with the exception of Chevron, Eni will be the international oil company with the largest operations in Venezuela. Maccotta told Petroleum AttachC) following the meeting that Italy's OPIC-equivalent agency, SACE, is not involved in the financing of the Eni deals.
3. (C) Ambassador Maccotta shared that the XXXXXXXXXXXX trip was originally scheduled for XXXXXXXXXXXX, but then "Honduras happened" and Italy found itself on the "wrongside" of the GBRV. At Minister Ramirez's insistence, the signing ceremony was rescheduled for January 26, but XXXXXXXXXXXX changed it to January 28 to reinforce the GBRV's need for Eni. Maccotta shared that the GBRV had rejected Eni's proposed changes to the terms and conditions of the oil deals, but 30 minutes before the ceremony was supposed to begin, XXXXXXXXXXXX told Ramirez, "take it or leave it, I can get on my plane and move on." Ramirez apparently used that half an hour to convince President Chavez to accept all of Eni's proposed changes or risk losing the deal.
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Venezuelan-Italian Mixed Commission
4. (C) Maccotta also previewed Italy's agenda for the May Venezuela-Italian Mixed Commission meetings. Of the 76 oil services companies located in Zulia state that were expropriated on May 8, 2009, roughly 30 were owned by Italian citizens or descendents of Italian immigrants. (Note: No compensation has yet been paid for these expropriations. End Note) Additionally, Italy wants to discuss GBRV land seizures and approximately $1.2 billion in pending foreign exchange approvals for Italian-owned companies.
5. (C) The Ambassadors also shared current perspectives on the economic-political situation of Venezuela and U.S.-Venezuelan bilateral relations. Maccotta inquired as to U.S. perspectives on the growing relationship between Iran and Venezuela and noted that ENI XXXXXXXXXXXX is expected to meet with NSA Jones in Washington, DC in March to discuss Eni's activities in Iran.
6. (C) COMMENT: It is unclear what bonus Eni really paid PDVSA, but it is interesting that regardless of the figure, PDVSA likely will not see any cash flow in the immediate future due to its $1 billion debt to the Italian company. The timing of the Eni-GBRV ceremony was also curious as it fell on the same day MENPET received bids in the Carabobo bid round. Perhaps Minister Ramirez needed to close a high-profile deal following the GBRV's January 20 announcements of its failure to move the Total/Statoil oil projects in Junin 10 forward and the failed Mariscal Sucre natural gas bid round. END COMMENT. DUDDY
