Rex Tillerson’s Nicaragua Connection

The past returns to haunt us sometimes, and those you thought you’d beaten come back with more power.  That’s exactly what happened to presidents Nicolas Maduro and Daniel Ortega on February 1st, when the United States Senate confirmed Rex Tillerson as the US Secretary of State for the new Trump administration.

Although neither Ortega nor Maduro have ever seen Tillerson in person, both know very well who he is, or to be exact, who he was: the CEO of Exxon Mobil Corporation, better known by its trade name of Esso.

Of course, the recently named Secretary of State also knows very well who they are: Maduro and Ortega head the authoritarian regimes of two countries who once stood up against the commercial and financial interests of Esso when he, Tillerson, was the “strong man” of that company.

In the case of Venezuela, in 2007 then-president Hugo Chavez decreed the nationalization of all private hydrocarbon companies, making the State the owner of 51% of the shares.

There followed a long series of judge’s rulings and negotiations, pushing the cost of the decision past $8 billion for the US transnational. In the end, they opted to leave Venezuela.

The situation in Nicaragua was less dramatic but more embarrassing to them. In August of the same year, Ortega’s new regime, in need of installations to store the fuel that their Venezuelan partner had offered them, ordered the takeover of seven of Esso’s tanks, located in the port city of Corinto.

The excuse was a supposedly unpaid tax bill from 2003-5 in the amount of $84.5 million córdobas, to which the government added a penalty of $17 million Córdoba’s, for an approximate total of US $5.5 million dollars.

The conflict forced Esso to choose among their most seasoned and capable Latin American experts and send them to Managua to negotiate with the Ortega government.

SUBSCRIBE TO THE DISPATCH

Get the most prominent news about Nicaragua, every Wednesday, directly to your inbox.

Email *

In passing, the transnational sought help from the US embassy in Nicaragua, and also support from the private sector, headed by Jose Adan Aguerri, then president of COSEP, the Superior Council of Private Enterprise, and Cesar Zamora, president of the American Chamber of Commerce in Nicaragua. In addition they reached out to Arturo Cruz, at that time the Nicaraguan ambassador in Washington, and to the American Chamber that was meeting in the United States capital at the end of 2007.

“Direct from his desk”

Although Tillerson didn’t travel personally to Nicaragua to deal with the crisis, his representatives indicated clearly to their intermediaries in the country that their proposals had come “directly from the CEO’s (Tillerson’s) desk.”

Following several weeks of intense negotiations in which Esso’s Latin American heavyweights met with top officials from Albanisa(*)and those from the Ministry of Mining and Energy, Ortega’s government and the transnational company arrived at an agreement.

Among the most important elements that came to light later was that the government agreed to return the tanks to Esso, and the company in turn committed to renting them to Petronic, the Nicaraguan state fuel company. In exchange, the suit would be withdrawn, as in fact occurred.

Although at the time there were voices giving the opinion that Esso had been humiliated by Ortega’s government, a source from the energy sector told Confidencial that the company was merely “surprised, not humiliated” by the attack.

Possibly as a result of that negotiation, Esso obtained government authorization to oversee the importation of Venezuelan crude to Nicaragua.  It did so for the next three years, until in March 2011 the company sold off all their operations in the region, except for Costa Rica where they had already exited several years before.

“Esso left Nicaragua happy because they made a good sale, successfully exiting a market they no longer wanted to participate in, to concentrate on the work of looking for new sources of oil,” stated the source we consulted.

Upon selling off the operation, Nicaragua ceased being a point of interest on Tillerson’s map.  His Senate confirmation as Secretary of State means that sooner or later, Nicaragua will once again become a point of interest on that map, and we’ll find out if the now powerful man in Washington has forgotten the embarrassment that Ortega subjected him to, or if he still holds on to the memory.