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Jamaica to benefit from PetroCaribe indefinitely

Published:Sunday | March 8, 2015 | 5:55 PM

Jamaica will continue to enjoy preferential payment terms for crude oil under the PetroCaribe pact with Venezuela "indefinitely", Phillip Paulwell, minister of science, technology, energy and mining, disclosed yesterday.

"There was a recommitment from the Venezuelan government to the PetroCaribe agreement and, regardless of where the price of oil is, they have committed to the agreement, unchanged ... indefinitely," Paulwell told The Gleaner, providing an update on Friday's heads of government meeting in Venezuela.

Under the PetroCaribe agreement, signed in 2005, the South American country allows some Caribbean territories to buy oil at market value but only pay a percentage of the cost upfront. The balance can be paid over 25 years at one per cent interest. For Jamaica, that upfront payment represents 60 per cent but, if the price of oil goes above US$100 per barrel, it slips to 50 per cent, with the other 50 per cent paid over the 25 years.

The energy minister, who represented the Jamaican Government in the absence of Prime Minister Portia Simpson Miller, described the meeting as very significant for the other incentives now on offer from the Venezuelan government.

He disclosed that the Nicholas Maduro-led administration has allocated US$200 million to encourage and assist member states to develop their renewable fuels industries, in an effort to keep their PetroCaribe debt from escalating.

"They have committed to identifying a particular oil well that would be dedicated solely to PetroCaribe supplies. They intend to concretise that within 60 days and, of course, they are looking forward to the 10th anniversary staging of the PetroCaribe Summit in Jamaica, which will coincide with the 200th anniversary of the letter that Simon Bolivar wrote in Kingston in September," Paulwell said.

more proposals on table

The traded compensation mechanism, which allows for payment using goods and services and under which Carib Cement has been supplying clinker to Venezuela, will be further strengthened, with the South Americans showing an interest in pharmaceutical supplies.

"There are a number of proposals on the table, and a team will be in Jamaica from Venezuela in a couple of weeks to meet with private-sector interests on a whole range of items that we have submitted," Paulwell said.

Asked about the ability of Venezuela to deliver on these commitments given the reports of growing economic and social instability, the energy minister was unfazed.

"People have been saying that since the day PetroCaribe was established 10 years ago," he said.