Caracas, Venezuela, December 12, 2005— In a move to diversify the country’s oil customers, Chávez and Paraguayan President Nicanor Duarte signed an agreement to enable Paraguay to defer 25 percent of its oil bill to Venezuela in exchange for buying 18,600 barrels per day of Venezuelan oil, over 70 percent of their oil consumption. Payment can be deferred for up to 15 years, at two percent interest per year. Venezuela has similar arrangements with 14 Caribbean countries.
On Hugo Chávez Frías’s recent visit to Uruguay and Paraguay, the Venezuelan president stressed the importance of decreasing his country’s economic reliance on the United States and increasing regional integration, and began working towards solutions with the continent’s other leaders.
“Venezuela has accomplished a great turn around, before all its oil was sent exclusively to United States,” said president Chávez at a MERCOSUR meeting on the day of the Paraguay agreement.
Indeed, both presidents showed their commitment to the deal when the agreement was almost put on hold when the Venezuelan State oil company, PdVSA, had asked the Paraguayan authorities for a letter of guarantee. The two presidents met privately and resolved the situation within hours.
But while the Paraguay oil deal may be a step toward diversifying Venezuelan oil exports, the agreement is for less than 1.25 percent of the oil that Venezuela sells to the United States every day. Buying about 60 percent of the country’s oil exports, the U.S. is by far the biggest customer for Venezuelan oil. Earlier this year, however, Venezuela announced plans to more than quadruple the amount of oil the country is selling to China by 2012, by increasing its oil production. China currently buys about 4.5 percent the amount of Venezuelan oil that the US does.
Also at the MERCOSUR meeting, Chávez reiterated his vision of a natural gas pipeline that stretches across the continent. “We have to connect ourselves not only to Central America, but also from Colombia to the South, to the Pacific Ocean, to Ecuador, Peru, and Bolivia, with a natural gas pipeline of 6,000 kilometers,” said Chávez speaking of the pipeline on a trip to Colombia last month.
Venezuela and Colombia recently agreed to the initial phase of the project, a $230 million pipeline between the two countries. The next step is expected to be the connection of that pipeline to the network of gas pipes in Central America.
Venezuela was also put on track to become a full member of MERCOSUR, the South American trade bloc, currently composed of Argentina, Brazil, Paraguay, and Uruguay. Full entry into the bloc, after which time Venezuela would have voting rights, could take between one and three years.
Chávez called for the block to become more political, and also more humane. “I believe Mercosur must be more political. I believe it’s a political project, a collective project for the peoples, for the polis,” said Chávez.“We need a MERCOSUR that prioritizes social concerns,” he added. “We need a MERCOSUR that every day moves farther way from the old elitist corporate models of integration that look for…financial profits, but forget about workers, children, life, and human dignity.”