Petrocaribe

Petrocaribe was a regional oil procurement agreement between Venezuela and Caribbean member states. The alliance was founded on 29 June 2005 in Puerto La Cruz, Venezuela during Hugo Chavez presidency. Venezuela offered member states oil supplies on a concessionary financial agreement. Petrocaribe has been part of the "pink tide" in Latin America seeking to achieve post-neoliberal development in the region. In 2013 Petrocaribe established links with the Bolivarian Alliance for the Americas (ALBA) aiming to go beyond oil trade and promoting economic cooperation. The deal fell apart by 2019 after sanctions, dwindling oil production, corruption, and oil price fluctuations took their toll. In 2022 discussions are underway to restart the agreement.

Treaty details

The agreement was initiated with the aim of having solidarity with other countries in accordance with Bolivarian Alliance for the Americas (ALBA). The payment system allows for the purchase of oil at market value for 5%-50% up front with a grace period of one to two years; the remainder can be paid through a 17-25 year financing agreement with 1% interest if oil prices are above US$40 per barrel. The agreement builds on payment terms from the San José Agreement and the Caracas Energy Accord. Energy and Petroleum Minister and President of PDVSA Rafael Ramírez said of the deal that it seeks to cut out the middleman in such transactions: "We're not talking about discounts...We're talking about financial facilities, direct deliveries of products, ndinfrastructure."

Membership

There are a total of 17 members; 12 of the members are from the 15 member Caribbean Community (CARICOM) (excluding Barbados, Montserrat, and Trinidad and Tobago). At the first summit, 14 countries joined the alliance; Antigua and Barbuda, the Bahamas, Belize, Cuba, Dominica, Grenada, Jamaica, Saint Lucia, Saint Kitts and Nevis, Saint Vincent and the Grenadines, Suriname, and Venezuela. At the third summit, Haiti and Nicaragua joined the union. Guatemala joined in July 2008 but left the organization in November 2013 stating that Venezuela had not provided them with the ultra-low financing rates that they had been promised.

Haiti had not been initially invited to the talks, since Venezuela did not recognize its then post-Jean-Bertrand Aristide government. However, Hugo Chávez actively "courted" newly elected president René Préval when he took office, much to Chevron, Exxon, and the US State Department's chagrin. After Venezuela had invested in developing Haitian infrastructure, and after the Haitian government convinced Chevron to deliver the oil from Venezuela, on 8 March 2008 the first shipment of oil was received. Honduras became the 17th member of the alliance in December 2007, under President Manuel Zelaya but left the organization after the 2009 coup d'état before rejoining it in May 2012. Belize set up the Belize Petroleum Energy Company to coordinate for the project.

Non-members

Barbados denied that it had succumbed to pressure from the United States, which has a strained relationship with Venezuela, as the reason, but 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. In April 2011 Venezuelan president Hugo Chávez renewed his offer for Barbados to join Petrocaribe.

Panama applied for membership on 3 March 2009 and initially said it would continue to join Petrocaribe under the new president, but Panama remains a non-member.

Summits

The first summit, which launched the project was held in Puerto La Cruz, Venezuela. The second summit of Petrocaribe was held in Montego Bay, Jamaica. The third summit was held in Caracas, Venezuela and the fourth summit was held in Cienfuegos, Cuba, in December 2007. The seventh summit was held in Caracas, on 6 April 2013. The membership of Honduras was revived after suspension because of the 2009 Honduran coup; Guatemala became an official new member of Petrocaribe. Summit also propose deeper cooperation between Petrocaribe states and states of ALBA on basis of new economic zone. Summit had discussion also about tourism, air traffic and food security. The 11th Summit was hosted by Haiti in Port-au-Prince.

Recent development

As of 2019, PetroCaribe has mostly dried up because of Venezuela's eroded domestic production and refining, but political and commercial ties in some prominent cases have endured. Critics say PetroCaribe suppressed the development of renewable energy, burdened these small nations with billions of dollars in debt – and spurred corruption. Venezuela oil industry is in turmoil. Venezuela's oil rigs, which had been producing nearly 3 million barrels of crude oil a day in 2014, produce now less than a million barrels a day. In addition to the economic collapse of Venezuela, U.S. sanctions against the country made it almost impossible to route bank payments to Venezuela. The only country receiving crude oil from Venezuela at this type of preferential treatment is Cuba. It is still getting some oil through Petrocaribe and Cuba doesn't have the debt problems because it brokered a deal to pay for its oil by sending doctors to Venezuela.

See also

*SUCRE (currency)
* History of Venezuelan Oil Industry
* Petróleos de Venezuela, S.A.

Notes

External links

Like Sucre in Ayacucho!
- Speech by President Hugo Chávez to the 6th Petrocaribe Summit

{{Pan-Americanism

Petroleum politics
Petroleum in Venezuela
Foreign relations of Venezuela
Energy in the Caribbean
Economy of the Caribbean
International energy organizations
Energy policy
Bahamas–Venezuela relations
Belize–Venezuela relations
Cuba–Venezuela relations
Dominican Republic–Venezuela relations
Haiti–Venezuela relations
Guyana–Venezuela relations
Nicaragua–Venezuela relations
Intergovernmental organizations established by treaty
International organizations based in the Americas