The terms under which countries purchased oil from Venezuela through the PetroCaribe Agreement have been eased by the country’s president Hugo Chavez in the light of high oil prices. PetroCaribe, a Venezuelan initiative comprising 17 mainly Caribbean countries, including Guyana, sees those states sourcing oil from Venezuela under concessionary terms.
According to Venezuela’s El Universal newspaper, under the new terms, when crude prices are higher than US$100, PetroCaribe members will pay 40 per cent of the bill and the other 60 per cent will be paid in 25 years with an annual interest rate of one per cent.
The current price per barrel of oil is in the US$140 range and the new agreement came into effect on Sunday. Under the previous terms of the agreement, if oil prices were higher than US$100, member countries paid 50 per cent of the bill within 90 days and Venezuela financed the other 50 per cent in 25 years with an annual interest rate of one per cent and a grace period of two years.
The new agreement also provides that if oil prices reach US$150, PetroCaribe signatory countries shall pay 30 per cent of the bill within 90 days and the remaining 70 per cent would have a special financing at the time of signing of final agreement.
The new terms were revealed at the end of a PetroCaribe summit, held in Maracaibo, Venezuela last Sunday. Prime Minister Samuel Hinds represented Guyana at the summit.
The El Universal report said that some member countries had raised the issue of the high oil price and its burden on them and Chavez decided to ease the oil purchasing terms. He was quoted as saying that since member countries have a long-term payment 50% of the bill “could be paid with agriculture products”.
Venezuelan Energy and Oil Minister, Rafael Ramirez, during the summit revealed that in the last three years, oil supply to PetroCaribe member states had increased and from 2005 to June 2008, 59 million barrels had been supplied to those countries.
Meanwhile, Chavez announced that one of the oil blocks in the Orinoco belt would be assigned to PetroCaribe member countries. During the summit, some Caribbean Heads of State made several requests to Chavez and most of them were accepted by the Venezuelan President, El Universal reported.