OIL-CARIBBEAN:
Petrocaribe Building
‘Anti-Crisis,
Anti-Hunger Shield’
By Humberto Márquez
CARACAS (IPS) -
Seventeen countries in
Central America and the
Caribbean are to make
down payments of only 40
percent on Venezuelan
oil, while cooperating
to expand their food
supply, and calling on
the North to take
measures to curb
speculation on futures
markets, which is
resulting in surging
crude prices.
"Petrocaribe must become
an anti-crisis shield to
protect us from hunger,"
said Venezuelan
President Hugo Chávez
who hosted the Fifth
Summit of this
South-South alliance.
The Dominican Republic’s
President Leonel
Fernández proposed
creating a bloc of the
57 poorest nations in
the South who are net
oil importers to lobby
for a global cooperation
agreement with oil
producers, and to demand
changes in the rules for
futures markets.
Prime Minister Ralph
Gonsalves of St. Vincent
and the Grenadines, for
his part, successfully
argued that Petrocaribe
address the issue of
fertilisers, which have
tripled in price in the
last three years,
threatening food
production on Caribbean
islands.
Not only Energy
ministers will attend
Petrocaribe meetings in
future. At the summit,
held in the city of
Maracaibo, 600
kilometres west of
Caracas, a council of
Agriculture ministers
was created, which is to
meet for the first time
on Jul. 30 in
Tegucigalpa.
Petrocaribe was created
in 2005 as a Venezuelan
initiative to supply
fuels, as well as extend
payment facilities and
logistical and technical
help, to neighbouring
countries that are net
oil importers.
The beneficiaries are
Antigua and Barbuda,
Bahamas, Belize, Cuba,
Dominica, Dominican
Republic, Grenada,
Guatemala, Guyana,
Haiti, Honduras,
Jamaica, Nicaragua, St.
Kitts and Nevis, St.
Vincent and the
Grenadines, and
Suriname. Costa Rica was
present as an observer
at this summit.
Under the Petrocaribe
agreement, Venezuela has
been sending 92,000
barrels per day (bpd) to
Cuba and has made
available up to 135,000
bpd for the other
countries, although the
effective demand has
been 86,000 bpd,
according to Venezuelan
Energy Minister Rafael
Ramírez.
In three years,
Venezuela has supplied
59 million barrels of
crude to its Petrocaribe
partners, for which they
paid 50 percent of its
value within 90 days and
the rest on credit over
25 years, with a
two-year grace period
and an interest rate of
one percent a year,
saving them 921 million
dollars.
Venezuela is also
developing joint venture
companies to provide
infrastructure for
storage and distribution
costing 550 million
dollars, and has
invested another 100
million dollars for
social purposes in these
countries.
BEANS AND FERTILISERS
But from now on, and as
long as the benchmark
price for North Sea
Brent crude remains
above 100 dollars a
barrel, beneficiaries
will be paying only 40
percent of their oil
bill within 90 days,
with the rest on the
same terms as before.
Chávez announced that if
the price of oil reaches
200 dollars a barrel,
only 30 percent would
have to be paid in 90
days.
"If things carry on like
this, after a certain
point we will have to
think about freezing
prices," said Chávez,
without elaborating on
what he had in mind.
Furthermore, Chávez
encouraged the Central
American and Caribbean
countries to make their
down payments for oil
"with cattle, beans or
tourism services."
Gonsalves scored a point
with his message about
fertilisers, which "cost
an average of 268
dollars a tonne in 2005,
405 dollars in 2007, 875
in 2008, and is being
quoted at 998 dollars a
tonne for 2009," he
said.
At those prices, "our
farmers cannot produce,
and if they do the
prices will be higher
than for imported food,
increasing our
dependency," he said.
Venezuela, which
produces two million
tonnes of urea a year,
offered to sell 100,000
tonnes a year to its
Petrocaribe partners at
a 40 percent discount,
half to be paid on
receipt of the product
and half when the crop
is harvested.
President Álvaro Colom
of Guatemala -- which
became a full member of
Petrocaribe at this
summit -- announced that
his country would
produce food for export
to Venezuela, which
imports more than 60
percent of its food.
Petrocaribe has "a new
vision, based on
complementing our
economies on the basis
of solidarity and fair
trade," said Colom. In
the first quarter of
2008, Guatemala paid 749
million dollars for
fuel, 63 percent more
than it spent in the
same quarter of 2007.
Costa Rican President
Oscar Arias, who had a
brief verbal spat with
Chávez 15 months ago,
came to Petrocaribe
after his country spent
838 million dollars on
oil imports between
January and April this
year, an amount 88
percent higher than for
the same period in 2007.
"BLOC OF 57" PROPOSED
Dominican President
Fernández elaborated on
"casino capitalism", or
speculating on futures
markets, which he said
"has become a
destabilising force in
the global economy."
He pointed out that a
barrel of crude cost 10
dollars in 1998, and
last week reached 147
dollars, an increase of
over 1,300 percent. But
this year the price has
risen by 10 percent a
month, fuelled mainly by
speculators.
Some days up to 850,000
contracts (for 1,000
barrels apiece) are
traded -- 850 million
barrels are bought and
sold -- on paper,
because the actual daily
consumption of crude
worldwide is ten times
lower.
Furthermore, Fernández
stressed, a contract
buyer pays only five
percent of the face
value before he or she
has possession of it and
can sell it again, for a
similar outlay.
"The 57 poor countries
of the South that are
net importers of oil
should form a bloc and
insist at the United
Nations that the minimum
payment for those paper
purchases should be at
least 50 percent," said
Fernández.
The Dominican president
also said: "we thank
Venezuela for its
solidarity, but we must
not leave it to make all
the running alone."
He said the 57
low-income oil-importing
countries have seen
their fuel bills
increase by 40 billion
dollars over the last
year as a result of the
doubling of crude
prices.
That is barely three
percent of the 1.3
trillion dollars by
which the incomes of
oil-producing countries
have risen over the same
period. Therefore, the
proposed 57-nation bloc
and its allies should
work to persuade the
oil- producing countries
to restore the amount
lost by the poorest
countries, through soft
loans or investment in
development, he said.
The outcome document of
the Fifth Petrocaribe
Summit urges the
regulatory authorities
of the futures markets
in the New York and
London stock markets to
take the necessary
measures to eliminate
speculation as a factor
in the international
prices of oil and other
commodities.
Venezuela, for its part,
made a commitment, to
set aside 50 cents of
each dollar for every
barrel of oil exported
outside Petrocaribe at a
price over 100 dollars,
in order to create a
subregional fund for
food security
initiatives.
Such a fund would
accumulate around one
million dollars a day.
Finally, Chávez proposed
handing over a crude oil
exploration and
exploitation block in
the Orinoco Heavy Oil
Belt -- in the southeast
of the country -- to an
association of the state
oil companies of the
Petrocaribe partners,
for their consumption
needs. He said Venezuela
in turn could build
fertiliser plants or
refineries in several of
these countries.
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