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### Viewing cable 07MANAGUA639, NICARAGUA - VENEZUELA MEMORANDUM OF UNDERSTANDING

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Reference ID | Created | Released | Classification | Origin
--- | --- | --- | --- | ---
07MANAGUA639 | 2007-03-09 23:06 | 2011-06-21 08:00 | UNCLASSIFIED//FOR OFFICIAL USE ONLY | Embassy Managua

`

    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

`