Editor's note: An earlier version of this article accidentally referred to Venezuela and Trinidad having 10 million cubic feet of gas. The correct figure should have been 10 trillion cubic feet.
Mérida, March 21, 2007 (venezuelanalysis.com)— Venezuelan President Hugo Chávez and the Prime Minister of Trinidad and Tobago, Patrick Manning met in Caracas yesterday to sign an energy agreement between the two oil producing countries. Despite previous conflicts regarding regional energy agreements, the two nations took a historical step forward in terms of economic integration, agreeing to unify the oil and gas reserves found along their maritime border.
During the signing of the agreement that took place in the presidential palace on Tuesday, the Venezuelan president pointed out that together Venezuela and Trinidad and Tobago have one of the largest gas reserves on Earth, making this agreement to unify the reserves of historic importance.
Taken together in one block, the total proven reserves reach 10 trillion cubic feet, almost half as much as all the gas reserves of the United States. "What great potential we have, more than the reserves, we have our will, our visions, our projects, and our efforts," said Chávez.
The two nations agreed on the general terms to share the hydrocarbon reserves located on the border between them, including oil and natural gas. The costs and benefits will be divided between the two states depending on the amount of participation of each government, guaranteeing a policy that will allow for the development of both nations. The Prime Minister Patrick Manning affirmed that the agreement will benefit more than just the two signing nations, but will also benefit the development of the entire region.
The new agreement for cooperation comes after what seemed to be a previous conflict between the two governments when Venezuela launched PetroCaribe, a subsidized oil program for the Caribbean nations. Under the program, Venezuela supplies oil to the nations of CARICOM with low-interest financing, allowing them to pay a portion of their oil bill over a period of 25 years. Most of the countries jumped at the deal as global oil prices have been a major blow to their small economies.
But Prime Minister Manning criticized the program last year, warning other Caribbean nations that they may no longer be able to count on his country's oil supply if they signed the energy agreement with Venezuela. Trinidad and Tobago produces about 150,000 barrels of oil per day, a large portion of which supplies the Caribbean region.
Manning warned that his government would look for other buyers. "It is a question of cutting your own throat if you are not careful," he warned at the time. Also, he warned that the PetroCaribe program would push multinational oil companies out of the region, since the Venezuelan government has agreed to only work with state-owned oil companies, discouraging the privatization of the region's oil facilities.
Yesterday, however, Manning expressed his desire for cooperation, "not only in benefit of the citizens of our two countries, but also for the citizens and interests of the development of Latin America," he said. "Our nations are very close neighbors and we must continue fomenting these relations and carry them to a higher level."
In what seemed to be a reversal of policy, the Caribbean leader communicated his intention to collaborate with Venezuela in the PetroCaribe program. Apart from the energy agreement, the Prime Minister said the purpose of his trip was to "renew his friendship with President Hugo Chávez."
He also expressed interest in joining the South American Organization of Gas Producers and Exporters, a recently created initiative being formed by Venezuela, Argentina and Bolivia that is to act similarly to OPEC, but in the area of natural gas.
After the signing, Venezuelan President Hugo Chávez said that the agreement represents a huge step for Venezuela which is also a Caribbean nation, in addition to being an Andean and an Amazonian nation.
He also stated that his ministers of energy will be working hard with the objective of making more agreements for the joint exploitation of the reserves. Chávez noted that Trinidad and Tobago possesses an extraordinary capacity for processing hydrocarbons and placing them in the market. Both leaders expressed interest in furthering energy cooperation between their countries.
For Venezuela, the new agreement is another part of the policy of integration that the government of Chávez has been carrying out over the past few years. "This is a step in the direction of creating and articulating new and diverse mechanisms of working together" concluded the Venezuelan leader.