Unrest In VenezuelaTuesday, March 18, 2014
47% of Petrocaribe’s energy from PDVSA
Figures in local press reveal Venezuelan oil company’s influence on its neighbours
CARACAS — Venezuela supplies its Central American and Caribbean neighbours with around 47 percent of their energy needs, a local newspaper revealed yesterday, as the level of Caracas’ influence over its regional partners was revealed.
Venezuelan daily El Universal claimed yesterday that recent figures show released by state-run oil company PDVSA indicate that regional neighbours received 103,000 barrels per day (bpd) of oil byproducts in 2013, sold at a preferential rate, with Caracas receiving products, such as food, as part-payment alongside long-term repayment plans. Eleven countries received up to 111,000 bpd each in 2012 alone.
The support, which is delivered under the Petrocaribe scheme, has allowed Venezuela to forge stronger alliances with neighbouring countries and to improve political and economic cooperation. Petrocaribe, a key part of Venezuela’s international diplomacy, was set up in 2004 under late former president Hugo Chávez and, despite fears of its termination, the programme has continued under the leadership of current President Nicolás Maduro.
Venezuela and 17 other countries make up the Petrocaribe — Antigua and Barbuda, Bahamas, Belize, Cuba, Dominica, Grenada, Guatemala, Guyana, Haiti, Honduras, Jamaica, Nicaragua, the Dominican Republic, St Kitts and Nevis, St Vincent and the Grenadines, St Lucia and Suriname.
Support for the members, El Universal said, tallied up to around US$3.7 billion of oil. PDVSA intended the value to be even greater, saying that the 103,000 bpd figure was only 84 percent of its goal.
Products For Payment
Petrocaribe operates under a two-tier repayment programme, allowing the countries benefitting from the scheme to pay for energy in two ways. Sixty percent of the bill must be paid within 90 days and countries have up to 25 years to pay off the remaining 40 percent (which is already totalled up at preferential rates) with minimal interest. Alternatively, they can also pay by providing goods and services in part-exchange.
The main products used for payment are types of food, useful for Caracas of late, with product shortages a key issue that has brought protesters to the streets.
“Petrocaribe pays us with enough food. Last year ended with US$800 million paid with meat (and) milk.,” Venezuela’s Minister of Petroleum and Mining Rafael Ramírez said a few weeks ago.
According to recent numbers provided by the oil minister, last year Petrocaribe paid Venezuela 21 percent of bills using goods and food. The remaining debt, which El Universal estimates to be worth US$2.9 billion, was either paid in cash or accounted for in Pdvsa’s short- and long term accounting.
“The current debt amounts to approximately US$1 billion, which we turn into food,” Ramírez said back in February.
But it’s the prices that make the scheme so appealing to Caracas’ regional neighbours. Members pay around 50 percent of market value, according to reports.
Despite fears that the Petrocaribe scheme would be at risk after the death of Chávez, the arrangement has continued. Ramírez says that “Petrocaribe is a model of cooperation.”
The region’s reliance on programmes such as Petrocaribe have caused concern as to how exposed the countries are to risk, should Venezuela detoriate and cut its support. Any changes to the programme, especially to countries like Cuba, would send shockwaves throughout the region.
Venezuela supplies more than 100,000 barrels per day of oil to Cuba, for which it is partly paid by the presence of more than 30,000 medics, trainers and others from the Communist-ruled Caribbean island. While Cuba is a part of the Petrocaribe, it is understood to have a separate agreement for oil with Caracas.
“We are going to strengthen the brotherhood between the Venezuelan and Cuban peoples,” Maduro declared at a rally over the weekend, in defiance of anti-government protests slamming the relationship between Caracas and Havana.