By Lavern Clarke, Staff ReporterJAMAICA HAS sufficient oil reserves to last only for the next week and a half, forcing the state-owned refinery to look to Ecuador for supplies as the oil strike in Venezuela continues into a second week.
Jamaica has 350,000 barrels of crude waiting to be shipped from Venezuela, which supplies some 70 per cent of the island's oil needs. The oil should have been lifted this week, but the national strike, aimed at forcing the resignation of Hugo Chavez, the controversial and colourful president of the world's oil producing nation, has kept supplies moribund. Venezuela had also chopped production by 1.7 million barrels or just about two thirds of the near 3 million barrels it ships daily, as the strike continued.
"The ship is sitting there but it cannot get loaded," Petrojam managing director, Winston Watson said Monday. "We are trying to find out when they are going to load, if at all."
The island has sufficient crude in stock to last until December 22, while the refinery's inventory of clean products, such as gasoline, is sufficient to last for the next three to four weeks, Watson said.
Additionally, another 350,000 barrel shipment ordered from Ecuador is expected here on December 23 or 24 sufficient time, the Petrojam manager indicated, to stave off any shortage.
"The consumer will not feel the effects of what is happening in Venezuela," the refinery operator told Wednesday Business.
The Kingston based refinery currently buys oil at about US$24-$25 from Venezuela under the San Jose Accord. It is assured of some 5.3 million barrels from the South American country annually. Mexico also supplies Jamaica under the same agreement.
Oil prices are usually quoted on the lifting date, which is the day on which the oil is placed aboard ship for delivery. Jamaica's oil bill runs to some US$600 million per year, or US$50 million per month.
The Petrojam refinery processes an average 22,000-25,000 barrels of crude per day, but in situations like the current supply freeze, "we usually cut back on the crude charge to maximise the run-time of the refinery," said Watson. The plant has the capacity to do 35,000 to 36,000 barrels per day.
Petrojam sourced the oil in Ecuador, a supplier it taps into occasionally, after Mexico advised that it could not meet Jamaica's immediate needs at such short notice. Ecuadorian oil, said Watson, was considered the next "most attractive" source on the basis of the types of products that can be extracted from its crude.
The 350,000 barrels were acquired at spot prices on the world market, but the cost is similar to what the refinery would have paid for San Jose oil, said Watson.
Yesterday, oil was fetching between US$25.50 and US$27 on the open market, falling between 19 and 27 cents Tuesday on news that Chavez was about to compromise on calls for elections, and was prepared to discuss a date for national polls. Venezuela is the world's fifth largest supplier of oil, and a member of the cartel of large oil producers, OPEC.
Last week's strike was the second major oil shutdown in the South American nation this year, the first being in April when the strike propelled a coup that ousted Chavez for two days.
Watson would not comment on whether a shift in the supply balance would be advisable, given the political upheavals in the supplier country, noting that it was for the policymakers to decide.
He said however that the San Jose Accord signed in 1980, does "guarantee Jamaica stability of supply", and would remain a reliable source even under extreme circumstances such as the United States declaring war on Iraq. Venezuela supplies some 13-15 per cent of the United States market.
"That's the beauty of Venezuela and Mexico to us," said Watson.
No comment was forthcoming from Government on the situation as the portfolio Minister, K.D. Knight and his junior minister, Delano Franklyn were both off the island yesterday.
