Venezuela increases Caribbean cheap oil deal

July 19, 2008

"Member countries of Petrocaribe, the Caribbean energy integration organisation that Venezuela initiated in 2005, agreed Sunday to adjust the terms of financing for the purchase of Venezuelan oil in order to lower the impact of soaring oil prices on Caribbean countries", according to a July 15 report.

Under the new terms, established at the fifth Petrocaribe summit in Venezuela on July 13, as long as oil sold by Venezuela cost more than US$100 per barrel, the impoverished Caribbean and Central American countries that form Petrocaribe will only have to pay Venezuela 40% of the cost up front, down from 50% previously.

However, Venezuela stated that if the price of oil rose above $200, then the upfront amount would drop to 30%. Petrocaribe nations have 25 years to pay off the remainder, at an interest rate of 1%.

According to a July 16 Associated Press article, Venezuela has also financed $2 billion, or 43%, of the 59 million barrels of oil it has sent since 2005 — saving member countries an estimated $921 million.

According to, Venezuelan President Hugo Chavez, who described the changes as "urgent", stated that "This could compensate for this horrible curve in the petroleum markets".

Chavez encouraged countries to pay part of their debt in "goods and services", reported.

Chavez stated that "It is impossible that in a summit in today's world the food crisis is not discussed". He said that "We should convert Petrocaribe into a type of anti-hunger shield, a shield to protect ourselves from misery, from hunger".

A Venezuelan Presidential Press report on July 14 stated that "Within the framework of Petrocaribe, Venezuela will supply fertilizers at discount to the member countries". Venezuela has also proposed helping construct fertilizer plants in Petrocaribe nations.

Venezuela has also proposed establishing joint ventures with state companies from Petrocaribe nations for oil extraction in Venezuela, so that each country could assist in producing its own oil supply. So far, eight such joint ventures exist.

The article reported that Guatemala had been accepted as the 18th member of Petrocaribe. Guatemalan President Alvaro Colom stated that Petrocaribe was "founded on a new vision ... the search for solutions which complement our economies, not absorb them".

AP reported that Costa Rica had also been invited, and expressed interest in joining Petrocaribe, which would make it the fifth Central American nation, along with Nicaragua, Honduras, Belize and Guatemala, to join the group. Costa Rica sent delegates to the recent summit and its foreign ministry released a statement saying it saw "no obstacle" to joining.

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