Caribbean Countries and Venezuela Confirm and Expand Oil Agreement

Venezuela and nine Caribbean countries signed bilateral agreements that worked out the details of Petrocaribe, under which Venezuela would supply Caribbean nations with oil under preferential financing terms.

Caracas, Venezuela, September 7, 2005—Nine Caribbean nations and Venezuela signed an agreement today in Montego Bay, Jamaica, that confirms and deepens the Petrocaribe agreement 14 countries signed last June. The nine bilateral agreements commit Venezuela to supply 77,300 barrels of crude and refined products per day to the signing countries and give these a two-year grace period to pay for the shipments at a 2% interest rate. If the market price of oil exceeds certain levels, Venezuela would finance a percentage of the cost over 25 years at 1% interest. Also, a part of the cost could be repaid in kind, such as with rice, bananas, or sugar. Venezuela would also assume transportation costs and costs for the development of oil infrastructure.

The signing countries include Antigua and Barbuda, Belize, Dominica, Grenada, Guyana, Dominican Republic, San Cristobal and Nieves, San Vicente and The Grenadines, and Suriname. Jamaica and Cuba did not sign a bilateral agreement with Venezuela at this meeting because they had done so at earlier meetings.

“We want to share the riches that nature gave us with the peoples of Latin America and the Caribbean… We are signing and committing to the supply of oil and combustibles that the people of the Caribbean will need for the next 100 to 200 years,” said Chavez.

Currently Caribbean countries are suffering much under the high oil price. During the meeting, demonstrators blocked some roads in Jamaica to protest rising prices.

The meeting also worked out details of the Petrocaribe agreement, such as the organization’s statutes and its presidency. Venezuela’s Minister of Energy and Petroleum, Rafael Ramirez clarified, “Petrocaribe is a cooperation and integration mechanism…, whose secretariat will have its permanent headquarters in Caracas. Also, the presidency will be held by the Venezuelan Minister of Energy and Petroleum, while the vice-presidency will be held by each of the host countries of the meetings.”

Ramirez also stressed that Central American countries are welcome to join Petrocaribe at any time.

Trinidad and Tobago did not join Petrocaribe last June because it said that the agreement hurts its oil interests, as it is an oil-exporting country and its natural market are Caribbean countries. Trinidad was also absent from the Jamaica meeting.

Chavez has stressed that Petrocaribe is part of Petroamerica, which includes the Andean countries of Petroandina and the countries of Latin America’s southern cone, which are supposed to be gathered in Petrosur. Chavez has also been promoting ALBA, the Bolivarian Alternative for the Americas, as an alternative to the FTAA, the U.S.-sponsored Free Trade Area of the Americas. Petroamerica would help even the path for ALBA. So far only Cuba has signed onto ALBA.

"This is one more platform in a great unified platform that we are promoting from Latin America and the Caribbean in favor of integration," said Chavez.

At the Montego Bay meeting, Venezuela’s President Chavez also proposed the creation of Electrocaribe, which would help Caribbean countries expand their electricity generation capacity by directing a portion of Petrocaribe financing towards a communal fund for this purpose. Venezuela already provided seed money of $50 million for a development fund during the June Petrocaribe meeting. That fund is being called the ALBA-Caribbean Fund.