Petrocaribe
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| Petrocaribe S.A. | |
|---|---|
| Type | Public |
| Founded | June, 2005 |
| Headquarters | ? |
| Industry | Oil |
| Products | Oil |
| Revenue | ▲ USD/$ ? billion (2006) |
| Operating income | ▲ USD/$ ? billion (2006) |
| Net income | ▼ USD/$ ? billion (2006) |
| Parent | PDVSA |
Petrocaribe S. A. is a Caribbean oil alliance with Venezuela to purchase oil on conditions of preferential payment. The alliance was launched in June of 2005. The payment system allows for a few nations to buy oil on market value but only a certain amount is needed up front; the remainder can be paid through a 25 year financing agreement on 1% interest. The deal allows for the Caribbean nations to purchase up to 185,000 barrels of oil per day on these terms. In addition it allows for nations to pay part of the cost with other products provided to Venezuela, such as bananas, rice, and sugar.[1]
"PetroCaribe will only deal with a state controlled entity, meaning that the PetroCaribe agreement is based on eliminating all intermediaries." Only state-run entities, not private businesses, can deal with PetroCaribe. The Venezuelan state oil company rejects business dealings with any private oil company in these countries, believing these private companies to be corrupt and criminal in their operations. http://www.venezuelanalysis.com/articles.php?artno=1660
Twelve of the fifteen members of CARICOM plus Cuba and the Dominican Republic signed the agreement on 7 September 2005. The nations signing the agreement were Antigua and Barbuda, the Bahamas, Belize, Cuba, Dominica, the Dominican Republic, Grenada, Guyana, Jamaica, Nicaragua, Suriname, St Lucia, St Kitts and Nevis, and Saint Vincent and the Grenadines. The only countries to choose not to sign on were Barbados and Trinidad and Tobago. Haiti was not invited to the talks, since Venezuela did not recognize its US-installed government. The country finally joined the alliance in April 2006, once the newly-elected president René Préval took office. Honduras, which is not a member of CARICOM, became the 17th member of the alliance in December 2007.[1]
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[edit] Reasons for the holdout
Although it is understandable that Trinidad and Tobago did not sign the agreement, being oil producers themselves, many have wondered about Barbados. Some have speculated that they have succumbed to pressure from the United States, because of their strained relationship with Venezuela. Barbados has denied that this is the reason, and has not ruled out agreeing to Petrocaribe in the future. On August 31 2005, energy minister Anthony Wood said that they are weighing options over signing Petrocaribe or maintaining their Current Relationship with Trinidad and Tobago. On 1 September 2005, Wood leaned towards acknowledging that Barbados would sign the agreement, given that changes are made to the original agreement. It is not known what changes are expected, but it does seem clear that the rise in international oil prices has contributed to the change of mind from Barbados. Barbados has since hinted that Petrocaribe would add a considerable amount of debt to the Barbados economy. [2]
[edit] Criticism
While the agreement offers concessionary financing to these heavily indebted nations, it places them in a financial bind by allowing them to pay with agricultural goods (whose value fluctuates greatly from week to week) for part of their fuel bills. These nations ultimately take on more debt to pay these bills. Additionally, open press reporting has documented that the majority of the signatory countries are either not receiving fuel shipments or are receiving sporadic shipments that do little to meet the internal needs of these nations[citation needed]. Only Jamaica and Cuba are receiving regular shipments, and it is widely rumored that Cuba is paying very little or nothing at all for its fuel shipments, owing to Venezuelan president Chavez's friendship with the Cuban government. Venezuelan oil minister Rafael Ramirez acknoweledged in December 2007 that his nation was shipping far less oil than previously expected; Petrocaribe members receive 145,000 barrels daily (rather than the 300,000 barrels initially planned), and of these, 95,000 go to Cuba.[2]
[edit] Notes
- ^ Honduras newest member of Venezuela-backed Petrocaribe, Platts, 21 December 2007, http://www.platts.com/Oil/News/6677473.xml
- ^ Honduras newest member of Venezuela-backed Petrocaribe, Platts, 21 December 2007, http://www.platts.com/Oil/News/6677473.xml
[edit] References
- PetroCaribe saves Caribbean millions - Venezuela - 13 August 2007, 09:12:00
- Belize joins Petrocaribe deal - December 4th, 2006: Caribbean Investor
- Manning warns Caribbean against PetroCaribe - January 13th, 2006: Jamaica Observer news
- PetroCaribe raises fears - January 12th, 2006: Barbados Advocate News
- Local News: Manning restates Petrocaribe warning - By Miranda La Rose: January 11th, 2006 - Guyana Chronicle Newspaper
- Rickey Singh Editorial: Bajans' lonely place in PetroCaribe - October 3rd, 2005: Trinidad and Tobago Express News
- Anthony Wood: Barbados won't sign Petro-Caribe agreement - September 29th, 2005: Barbados Advocate News
- Sir John praises Barbados for not taking oil deal - September 25th, 2005: Barbados Daily NationNews
- 'SAY NO TO OIL DEAL�´ - September 22nd, 2005: Barbados Advocate News
- Oil deal is far too risky - September 23rd, 2005: Barbados Advocate News
- Case against PetroCaribe - September 18th, 2005: Barbados Nation News
- Regional assistance at what cost? - August 29th, 2005: Barbados Advocate
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