Caribbean oil-producing countries take steps to form regional petroleum firm

Curtis Williams
OGJ Correspondent

PORT OF SPAIN, July 14 -- Venezuela and thirteen Caribbean countries have taken the first step towards the formation of a large regional petroleum company which will lead to cheaper oil prices and security of supply for the region.

The countries' energy ministers held a meeting this past weekend in Caracas with Venezuela's Minister of Energy and Mines Rafael Ramirez at which they agreed to "take concrete steps toward the achievement of energy integration among their states in areas of exploration, production, refining, transportation, storage, trade, and supply."

The countries have committed themselves to work towards the formation of PetroCaribe, which would allow Caribbean countries—both oil and gas producers and consumers—to engage on a government-to-government basis in the exploration, production, processing, and commercialization of oil, petroleum products, and natural gas.

A communiqué released at the meeting's conclusion said, "[We] met. . .to discuss Petrocaribe, a political and commercial initiative based on the conservation of nonrenewable energy resources and shared solidarity in order to secure access to energy at just and reasonable prices within the framework of Latin America and the Caribbean energy integration, and agreed to use their best endeavors to bring this about."

The ministers also agreed to "establish a technical commission to study modalities of its implementation towards the enhancement of the principles embodied in existing accords such as the San Jose and Caracas accords."

Ramirez said the signing of the communiqué represented a step forward in the shaping of PetroAmerica "because during the meeting the political terms were agreed upon in order to move later on the commercial terms."

He added, "The important thing is that the political terms must first be laid down before our companies can proceed commercially."

Ramirez said as the largest hydrocarbons producer in the Western Hemisphere it had a fundamental role of "placing at the disposition of our brothers in the Caribbean the same terms of the energy agreements of the Caracas accord."

He said, "Reaching agreements with Jamaica, Trinidad and Tobago, and Cuba to articulate our refining system and jointly distribute our commercial brand products through a new form, which is PetroCaribe."

Existing mechanisms
Ever since world oil prices skyrocketed in the 1970s, oil-producing countries in the Caribbean have put in place several mechanisms to help their neighbors shoulder the high cost of imported energy.

Venezuela has been at the forefront of that policy, having joined with Mexico back then to create the San Jose Oil Facility, which was designed to guarantee oil supplies to many Central American and Caribbean countries based on a preferential financing mechanism.

Then in 1999, when Venezuelan President Hugo Chavez began his term in office, that country launched another oil facility known as the Energy Agreement of Caracas with several countries in the region, including Cuba.

Now Chavez is seeking to take the oil assistance policy to a new level by proposing the launch of his so-called PetroCaribe in the North and Petrosur in the South with both companies eventually coming together to form the larger Paroles de America which he proposed would be the largest oil and gas company in the world.

As part of the agreement Venezuela and the islands will explore the possibility of the Caribbean islands buying oil directly from Venezuela on a government-to-government basis and then refining it in Trinidad and Tobago with the oil being owned by the governments and not the large oil companies, which supply crude in the region.

Trinidad and Tobago's Energy Minister Eric Williams said while there was a long way to go there was a commitment to making energy prices in the region cheaper.

He said another part of the PatroCaribe initiative involved his country's state-owned Petrotrin forming partnerships with PDVSA in exploring the Plataforma Deltana area.

On his last visit to Trinidad and Tobago Chavez had invited Petrotrin to take a share in the gas rich Plataforma Deltana area and there have been discussions between the two countries.

In addition Trinidad and Tobago has proposed an Intra Caribbean Gas Pipeline to provide cheaper energy to the Eastern Caribbean, Venezuela has offered to be part of this.

Williams said, "We are making significant progress, Venezuela is working with the Caribbean as partners and we are hopeful that something meaningful will result from this venture."

The countries involved in the initiative are Jamaica, Cuba, Guyana, Trinidad and Tobago, Grenada, St. Vincent and the Grenadines, St. Kitts Nevis, Suriname, the Bahamas, Dominica, and Venezuela.

The countries are slated to meet Aug. 26-27 in Jamaica.