Petrocaribe: Oil for Unity
By
Miguel Lozano
Caracas - Founded four years
ago, the Petrocaribe Energy Pact has
overcome all negative predictions about it
while the project has survived the ups and
downs of the world oil market as an
alternative which many distrusted when it
was first launched.
Set up at the initiative of Venezuela, the
world's fifth-largest oil-exporting
country, Petrocaribe has proved to be a
pillar of Latin American integration by
delivering oil to its member states at a
time of crisis.
Petropcaribe is currently shipping 121,000
barrels of fuel daily to 14 countries,
including 20,000 to Honduras, on
preferential payment terms.. Shipments to
the latter have been suspended following the
coup that ousted President Manuel Zelaya
late last June.
Out of the 22 signatories to the pact, four
are still to make it effective. Under the
deal, its oil importers can pay back their
bills in some cases in a 25-year period,
including a one-percent interest.
It must be recalled that this
pro-integration mechanism was set up at a
time when prices were skyrocketing. Since
then, Petrocaribe has proved useful to cope
with other difficult situations under a
system that takes into consideration the
conditions prevailing on the world oil
market.
Under the agreement, the funding covers up
to 40 percent of the oil bill when prices
are above 50-dollars a barrel. It may climb
to 50 percent if prices go over 80 dollars a
barrel and to 60 percent should they rise
above 100 dollars a barrel.
Little by little Petrocaribe began to move
away from Washington Consensus -backed
models in order to promote trading crude oil
for products and services from member
states.
The Central and South American nations and
their Caribbean counterparts grouped in
Petrocaribe are home to 88 million people
and their territorial extension is estimated
at 1.879 million square kilometers.
Petrocaribe is looking beyond a mere trade
pact operating under flexible payment terms
with a view to setting up a regional energy
program, including the necessary
infrastructure.
Petrocaribe's success is also evident in
the new oil refineries that have been built
while others have been enlarged or
refurbished. Power generation has also
increased thanks to investment estimated at
24.566 billion dollars. Those programs have
also created some 60.000 direct or indirect
jobs.
As of last June, Petrocaribe was operating
11 joint-ventures involving Venezuela and
another eight member nations.
Two Petrocaribe-flagged oil tankers (Petion
and Sandino) are sailing the Caribbean Sea
under a policy aimed at reducing transport
costs and eliminating intermediaries.
The 140 million dollars paid for the first
two tankers has accounted for a 20-percent
drop in transport costs.
Some 6.9 billion dollars worth of oil
products have been traded so far. Out of
that total, 2.9 billion dollars are long
term deals under which several nations have
received 90.5 million barrels of fuel
including natural gas, gasoline and diesel.
Thanks to Petrocaribe small countries like
Dominica, St. Vincent and the Grenadines,
Grenada, St. Christopher and Nevis and
Nicaragua have enlarged their fuel storage
and distribution capacity while other
projects are underway.
Petrocaribe�s policy also targets enlarging
the power distribution network by providing
funds to upgrade power plants in Nicaragua,
Haiti, St. Christopher and Nevis and St.
Vincent and the Grenadines.
According to recent estimates, those
projects, whose overall capacity is 320 MW,
will meet from 17 to 40 percent of the power
demand in the countries involved.
The program envisages the construction of
eight refineries in Cuba, Nicaragua, Haiti,
Jamaica and Dominica to boost the region's
capacity to 580,000 barrils per day.
Petrocaribe's projects have gone beyond the
energy sector as it is also supporting key
areas of social development by means of the
ALBA-Caribe Fund.
The Alba-Caribe Fund brings together the
energy pact and the Bolivarian Alliance
For the Peoples of our America. The latter
stands as another pro-integration initiative
that has been joined by Antigua and Barbuda,
Bolivia, Cuba, Dominica, Ecuador, Honduras,
Nicaragua, St. Vicente and the Grenadines
and Venezuela.
The trusteeships responsible for handling
the oil bill covered by long-term payment
agreements are also supporting 48 social
projects in areas like housing, health, road
building, citizens' safety and education in
11 countries. Their investment is estimated
at 222 million dollars.
Technical groups have been set up to study
proposals for a gas-supply master plan,
energy saving and efficiency by replacing
incandescent bulbs with fluorescent lamps.
A preliminary study to build small
hydro-power stations is underway too.
Petrocaribe is also sponsoring projects on
renewable energy, including wind,
geothermical and solar energy.
This pro-integration group is made up of
Antigua and Barbuda, the Bahamas, Belize,
Cuba, Dominica, Grenada, Guatemala, Guyana,
Haiti, Honduras, Jamaica, Nicaragua, the
Dominican Republic, St. Christopher and
Nevis, Saint Vicente and the Grenadines,
Saint Lucia, Suriname and Venezuela.
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