BASSETERRE, St Kitts (Reuters) – Venezuelan President Hugo Chavez vowed yesterday to strengthen the PetroCaribe regional energy alliance that his nation funds, despite the drop in world oil prices over the last year.
Chavez made the promise in St Kitts and Nevis at a summit of leaders of the 18-nation organization that groups Venezuela with communist-ruled Cuba and other oil-importing Caribbean and Central American states. Created in 2005, the alliance allows the nations to purchase Venezuelan oil on better terms.
“PetroCaribe is a geo-political, geo-economic platform … we’re going to strengthen it,” the leftist Venezuelan president said in a speech at the opening of the meeting.
Falling oil prices, which have dropped by more than half from record highs near $150 a barrel last July, have squeezed Venezuela’s oil income. Venezuela is South America’s largest oil producer, with output of about 3 million barrels per day (bpd).
Analysts say the falling oil revenue reduces the Chavez’ government’s ability to not only fund flagship social programs at home but also “oil diplomacy” initiatives like PetroCaribe, which have projected the Venezuelan leader’s political influence.
Chavez is a vocal ally of Cuba and fierce critic of US policies.
He rejected suggestions yesterday that his country could struggle to sustain PetroCaribe as a result of the global economic downturn and reduced oil income.
Describing global capitalism as a “fatally wounded giant,” Chavez said that cooperative alliances like PetroCaribe were the best way for developing countries to confront the international economic crisis.
“Oil prices are beginning to pick up again,” he said.
Oil slipped below $72 a barrel on Friday. It jumped to over $73 a barrel on Thursday, near an eight-month high.
Chavez and his oil minister Rafael Ramirez said the St Kitts meeting would look at ways of bolstering the financing of PetroCaribe, which has ambitious projects to build and upgrade refineries across the region.
“PetroCaribe will grow more solid every day, independently of the international situation and of the oil price,” Chavez told reporters before the summit started.
Dominican Republic President Leonel Fernandez was among the heads of state attending the meeting. Nicaraguan President Daniel Ortega was also expected to appear yesterday. Cuban President Raul Castro did not attend, sending a vice-president instead.
Most PetroCaribe members, the bulk of them small, oil-importing Caribbean states, say the deferred and low interest payment terms they enjoy for their Venezuelan oil purchases under the alliance offer relief for their cash-strapped economies.
But analysts say the alliance still suffers from organizational problems and logistical difficulties in distributing and storing the Venezuelan crude and refined products across the region.
They also question whether PetroCaribe can deliver on its ambitious program to upgrade and build a network of refineries in the Caribbean and Central America, as well as funding regional development projects and agriculture.
Besides Venezuela and Cuba, the alliance includes Antigua and Barbuda, Bahamas, Belize, Dominica, Grenada, Guatemala, Guyana, Haiti, Honduras, Jamaica, Nicaragua, Dominican Republic, St. Kitts and Nevis, St. Vincent and the Grenadines, St. Lucia and Suriname.