The Guardian 6 July, 2005
The fundamentals of Petrocaribe
VENEZUELA: Leaders from more than 10 countries attended the 1st Energy Summit of Caribbean heads of state and/or government in Puerto La Cruz. They discussed a draft document for a new institution, Petrocaribe, as part of a broader energy integration, dubbed "Petroamerica" by Venezuelan President Hugo Chávez, and finally signed the agreement which is based on shared solidarity.
The signatories include: Leonel Fernández (Dominican Republic); Keith Mitchell (Grenada); Percival Patterson (Jamaica); Jules Rattankoemar (Suriname); Willmoth Daniel (Antigua and Barbuda); Earl Aim Martin (St Kitts and Nevis); Petrus Compton (St Lucia); Wildo Marín (Belize); Leslie Miller (Bahamas); Ralph Gonsalves (St Vincent and the Grenadines); Samuel Hinds (Guyana); Roosevelt Skerrit (Dominica); Fidel Castro Ruz (Cuba) and Hugo Chávez (Venezuela). Trinidad and Tobago (an oil-producing country) and Barbados (a refining country) requested time to further study the proposal.
President Hugo Chávez explained during the Summit that the Venezuelans had designed a plan for Petrocaribe, according to which oil supplies would be directed toward three points: Cuba (including Jamaica); a route toward Haiti, and a third toward the eastern Caribbean.
Only by avoiding intermediaries would there be a substantial savings in fuel costs, he added. Referring to his country’s enormous oil and gas reserves — greater than those of any Middle Eastern country — the president stated that the Venezuelan people want to share these with their southern brothers, and even with their Northern ones, to whom they are already sending considerable amounts.
In order for operation to begin immediately, he proposed a fund called ALBA Caribe for Economic and Social Development, which will be supplied by contributions from financial and non-financial instruments, with percentages appropriate to each individual case, and with a total that would be financed from (oil) supplies to the members. Venezuela would contribute US$50 million as initial capital.
PDVSA has already created a subsidiary called PDV Caribe, Chávez noted. Its transportation capacity would be adequate for supplies and would be charged at cost without any additional fees, thus reducing expenses, he added.
That affiliate, he explained, would also organise direct supply, storage and refining where possible; it would prioritise the neediest, and would adopt plans for training human capital, mass vaccinations and investments in public health.
He emphasised that the financing agreement would be a long-term one.
The Venezuelan president stated that Petrocaribe also would help with developing alternative sources and highly efficient energy production systems.
The Venezuelan proposal has been fine-tuned for months, he explained, so that it takes into account responsibility for production, trade, transportation and other aspects, and formal work must be done with an organisation that would be a ministerial council that would obligatorily meet once a year.
Therefore, political will is needed — he emphasised — and all types of pressure must be resisted.
Within that structure, an Executive Secretariat is proposed that would be charged with permanent administrative tasks, under the Venezuelan Ministry of Energy.
Remarking on the current crisis, Chávez quoted from a 1970s-era book citing energy waste as one of the causes of such a crisis, and commented that the energy consumption of the New York Twin Towers alone was equivalent to that of a city with 100,000 people.
He exposed scheming by the US government, which is manipulating a Venezuelan oil company in the US that owns several refineries and never returned its profits, except for this year, prompting a Washington investigation. However, the Venezuelan government is not worried, and is resolved to be completely free, whatever the price.
The leader of the Bolivarian Revolution said that OPEC has been considerably increasing its production in the face of growing demand, and that non-members have increased more, and are closer to possible production ceilings than the members.
Chávez noted that currently, price fluctuations are very sensitive, and any hurricane or strike threat in an oil-producing country immediately causes prices to rise. It should also be taken into account that refining capacity has remained the same for many years, while demand for petroleum products has grown so much that the refinery ceiling has been reached.
Crude oil prices are expected to rise to US$70 per barrel in the next few years.