Venezuela and FMLN Mayors of El Salvador Form Joint Venture

El Salvadoran Mayors of towns controlled by the leftist FMLN formed a joint-venture with Venezuela's PDVSA to supply 100,00 barrels of oil per month to El Salvador. this is the first such venture that has been formed with local instead of national governments.

Caracas, Venezuela, April 8, 2006—On Wednesday, the Venezuelan government signed agreements with the Inter-municipal Association of Energy for El Salvador (ENEPASA) initiating a joint venture company, which it is hoped, will provide cheaper oil to El Salvador and Central America.

ENEPASA is a recently formed association, constituted by 20 mayors from the leftist party Farabundo Marti National Liberation Front (FMLN).  The agreement was signed between ENEPASA and PDV Caribe, a subsidiary of PDVSA, the Venezuelan state-owned oil company.  While Venezuela has formed other such joint ventures with various other countries, this is the first of its kind that has been formed with representatives of local governments, and entities other than a national government or private businesses.

The new company, ALBA Petroleos de El Salvador was formed with $1 million, 60% financed by PDVSA, and 40% from ENEPASA.  According to PDVSA, with this joint venture, they will be able to send 100,000 barrels of petroleum per month to El Salvador, which it is believed will provide for 30% of the Salvadoran population’s energy needs of just under 7 million inhabitants.

Carlos Ruiz, the mayor of Soyapango, El Salvador, and the president of ENEPASA, said that special payment plans will ensure, “that the crude arrives to businesses, cooperatives, and consumers at the lowest prices.”

Venezuela’s President Hugo Chavez proposed in March that, “of the $6 million which the initial 100,000 barrels will cost, 60% could be paid over a period of 90 days, and the rest could be given a term of 23 years with 1% fixed annual rate… and when you have reactivated your production, we will look for the payment to be in coffee, sugar, industrial goods and other products that we need.”

According to Alejandro Granados, PDVSA Vice-president and President of PDV Caribe, ALBA Petroleos de El Salvador will be a non-profit venture, with the objective of transferring benefits to the people of El Salvador as part of the new integration of America.

The creation of the joint venture was the first step in an agreement between PDV Caribe and ENEPASA, which was signed on March 20, in Caracas, and laid the groundwork for El Salvador to import petroleum from Venezuela.

According to the March agreement: “the joint venture… will have the objective of accomplishing all of the activities related to the commercialization of petroleum and its derivatives in El Salvador… both parties will look for the way to jointly create the necessary infrastructure, in El Salvador and elsewhere, for the reception, storage and distribution of the combustible, which will be destined for the Salvadoran people.”

“We are looking beyond the pessimism of governments that have other ideas and other orientations, for alternative ways to help the people of the world…  This is what we are doing with our brothers and sisters, the people of El Salvador…,” declared President Chavez at the March 20th event. “This is the epitome of ALBA,” making reference to his Bolivarian Alternative for the Americas proposal for regional integration, which he has promoted as an alternative to free trade. 

El Salvador signed the Central American Free Trade Agreement with the United States last year, and on March 1st was the first Central American country to implement the treaty.  El Salvador is also the only Latin American country to still have troops in Iraq.

Salvadoran President, Tony Saca criticized the joint venture in March, urging the FMLN mayors not to create “false hopes” and pointing out that El Salvador lacks the infrastructure to be able to refine the Venezuelan crude.

 In Other Oil News:

  • Lyondell Chemical and Citgo Petroleum, subsidiary of PDVSA, have decided to sell their Lyondell refinery in Texas.  Venezuela owns 42% of the plant, which processes 280,000 barrels daily, 230,000 of which are supplied by PDVSA.  According to El Nacional, Venezuela will receive between $500 and $800 million in the sale.  
  • Felix Rodriguez, Citgo president will be in New York this Saturday for the “1st Citgo Discounted Heating Oil Program General Assembly.”  Rodriguez will discuss and debate the results of the program, which has benefited a number of poor communities in the Bronx and around the United States.