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Petrocaribe

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Petrocaribe S.A.
Company typePublic
IndustryOil
FoundedJune, 2005
Headquarters?
ProductsOil
RevenueIncrease USD/$ ? billion (2006)
Increase USD/$ ? billion (2006)
Decrease USD/$ ? billion (2006)
ParentPDVSA
  Venezeula
  Petrocaribe member countries
  CARICOM members not part of Petrocaribe

Petrocaribe S. A. is a Caribbean oil alliance with Venezuela to purchase oil on conditions of preferential payment. The alliance was launched in June of 2005. The payment system allows for a few nations to buy oil on market value but only a certain amount is needed up front; the remainder can be paid through a 25 year financing agreement on 1% interest. The deal allows for the Caribbean nations to purchase up to 185,000 barrels of oil per day on these terms. In addition it allows for nations to pay part of the cost with other products provided to Venezuela, such as bananas, rice, and sugar.[1]

12 of the 15 members of CARICOM plus Cuba and the Dominican Republic signed the agreement on 7 September 2005. The nations signing the agreement were Antigua and Barbuda, the Bahamas, Belize, Cuba, Dominica, the Dominican Republic, Grenada, Guyana, Jamaica, Suriname, St Lucia, St Kitts and Nevis, and Saint Vincent and the Grenadines. The only countries to choose not to sign on were Barbados and Trinidad and Tobago. Haiti was not invited to the talks, since Venezuela did not recognize its US-installed government. The country finally joined the alliance in April 2006, once the newly-elected president René Préval took office.

Reasons for the holdout

Although it is understandable that Trinidad and Tobago did not sign the agreement, being oil producers themselves, many have wondered about Barbados. Some have speculated that they have succumbed to pressure from the United States, because of their strained relationship with Venezuela. Barbados has denied that this is the reason, and has not ruled out agreeing to Petrocaribe in the future. On August 31 2005, energy minister Anthony Wood said that they are weighing options over signing Petrocaribe or maintaining their Current Relationship with Trinidad and Tobago. On 1 September 2005, Wood leaned towards acknowledging that Barbados would sign the agreement, given that changes are made to the original agreement. It is not known what changes are expected, but it does seem clear that the rise in international oil prices has contributed to the change of mind from Barbados. Barbados has since hinted that Petrocaribe would add a considerable amount of debt to the Barbados economy. [2]

References

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