NOT SO SLICK

Arthur said the nine CARICOM members that signed the deal with Venezuela, which promises fuel on easy terms, will violate the rules governing the Community as it squeezes out sister member state Trinidad and Tobago, the long-serving oil exporter to the region.

Trinidad and Tobago, the lone oil and gas producing country in CARICOM, supplies over 14 million barrels of oil annually to their Caribbean markets.

Jamaica is Trinidad’s largest CARICOM importer with an estimated 10 million barrels a year.

Under the terms of the Petrocaribe agreement, Caribbean country members will purchase 185,000 barrels per day of crude from Venezuela, OPEC’s third- largest producer.

Caribbean governments will pay market price for Venezuelan oil, but they would only be required to pay a portion of the cost up front and could finance the rest over 25 years at one percent interest and could also pay for part of the cost with services or goods such as rice, bananas or sugar.

Barbados, which has not signed on to the deal, wants a remake of the Petrocaribe agreement and this country’s Prime Minister, Patrick Manning, has been mandated to take a proposal to Venezuela’s President Hugo Chavez for a deal that would not run counter to the terms or spirit of the CARICOM treaty.

"I feel that both Trinidad and Venezuela should be part of the deal and, quite frankly, if people want to help us with energy at a time when energy costs are rising and will continue to rise, I think people should join together and collaborate in trying to help the region rather than people having separate arrangements," Arthur said in Bridgetown, following a meeting with Manning and Jamaica’s prime minister PJ Patterson.

"It may seem like a simple outcome to an important meeting, but the solution is if there is to be a Petrocaribe agreement, it has to be consistent with the rules governing CARICOM and as prime minister with lead responsibility for energy, the lead is being taken by the Prime Minister of Trinidad to carry forward the dialogue," Arthur said.

He said such a dialogue would ensure that arrangements were in place so that an energy relationship with Venezuela and the rest of the Caribbean "remains consistent with the rules of CARICOM."

In the case of Barbados, Arthur said "that if we are to get involved in any bilateral agreement with any extra-regional entity, first of all there must be certification by CARICOM that it does not undermine the interest of another CARICOM country who has an interest in the particular matter."

Trinidad and Tobago has been expressing concern about its own oil exports to the region even at the unveiling of Petrocaribe in Puerto La Cruz last June by Venezuelan President Hugo Chavez, who has been taking a hands-on approach to managing Venezuela’s oil resources.

According to El Universal newspaper in Caracas, Manning, early o’clock drew attention to the high-ranking gathering of his country’s disadvantaged position in the Petrocaribe deal.

"This entails that Venezuelan by-products will have competitive advantage as compared to my nation’s products. I think you forgot about our supply, and we would like to analyse further this proposal. This is troublesome, as some facilities are owned by multinational corporations, and they are not state property," the Venezuelan paper quoted him as saying from recordings obtained from the closed-door meeting.

The dissension clearly annoyed Chavez and Fidel Castro that Manning was not playing ball by not joining other countries who eagerly initialled their intention to be part of the deal without their legal and energy advisers closely scrutinising its contents.

Countries signing on to the deal are also supporting Chavez and Castro’s Bolivarian Alternative for Latin America and the Caribbean (ALBA), as an alternative for the US-touted Free Trade Agreement of the Americas (FTAA).

While signatory countries are lauding the Petrocaribe deal, Barbados does not intend to be part of it because it will not deliver discounted prices for petroleum products.

Barbados’ Minister of Energy Anthony Wood said oil and petroleum products originating in Venezuela will attract the Common External Tariff (CET), which at the moment stands at 20 percent, making these already expensive products more costly.

"In the current arrangement with Petrotrin, Barbados obtains rebates and discounts on its purchases of petroleum products. During the last year these discounts and rebates were worth about $ 4.2 m."

The Petrocaribe agreement will result in debt-accumulation at a tremendous rate, said Wood.

"Based on the value of our petroleum imports last year of just over BDS$ 342 m, with a price of oil at $ 70 a barrel, the addition to Barbados’ debt would be about BDS$ 136 m. The debt implication of the PetroCaribe agreement runs counter to the Government’s debt management strategy.

"Consumers in signatory countries may be called upon to pay for the product twice (at the point of purchase and when the country is required to liquidate the debt)," Wood said.

The Energy Minister said his country also has to consider the refining of its crude oil currently done at Petrotrin.

"Previously," he said, "the Venezuelans indicated to Barbados their unwillingness to refine our crude because of the small quantities and the fact that it would be delivered by ships."

In Jamaica, both the ruling and opposition parties are already bickering over the use of the purported savings that will accrue from the Petrocaribe deal.

In response to a question from Leader of the Opposition Bruce Golding, Prime Minister PJ Patterson said there will be no prior parliamentary approval for the use of the funds and that the parliament will receive reports on its use when the annual budget and supplementary budgets are presented.

Prior to Patterson’s response, Golding said he had "deep and serious" concerns that the funds could be used for political campaigning for the 2007 general elections.

According to Patterson, the inflows from the agreement could add up to approximately US$600 million over the period of the agreement. Inflows for the current financial year, based on purchases made by Petrojam between July 2005 and March 2006, are projected at US$136 million. He also said the projected amount required for repayment under the terms of the agreement for the next five years was between US$58 million and US$63 million.