Prime Minister P. J. Patterson, has called Caribbean countries to embrace the PetroCaribe initiative, noting that, “it provided critical support to vulnerable states and provide assistance “for those in our population who are most at risk.”

The Prime Minister, who was speaking in the House of Representatives on Wednesday (July 13), noted that “the agreement speaks to equality of states and underscores the principality of national sovereignty. It specifically recognises the importance of Trinidad and Tobago as a reliable energy exporting country.”

Beneficial elements of the agreement between CARICOM and Venezuela, which Jamaica and several other member states have already signed, include the establishment of a fund for social and economic development in the wider region for which Venezuela has made the first capital injection of US$50 million; facilitating the installation of a storage infrastructure for member states who subscribe to it; shipping being provided at cost to move petroleum within the region; and the provision of training to enhance efficiency in the use of conventional and renewable energy sources.

He explained that the agreement provided an extension of short-term financing from 30 to 90 days. “The deferred payment facility available under the existing Caracas Accord has been significantly enhanced, recognising the dramatic increase in the cost of petroleum. In this regard, where the per barrel price exceeds US$40, the payment period is being extended to 25 years, including a grace period of two years and at an interest rate of one per cent,” he explained.

Continuing, the Prime Minister noted that the amount of funds available under the long term financing facility, “now takes account of prices above the US$40 barrel but should prices hit the $100 mark, the trigger would allow 50 per cent to be available under this deferred payment plan.

The Prime Minister noted that the ability to procure energy at cheaper cost, would no doubt redound to the benefit of Caribbean economies, given that energy use was a major component in the production of goods and services. “The cost of securing and utilising energy sources is critical if all our countries are to achieve and then maintain a competitive edge in the global economy,” he stated.

He noted that the volatility of the world’s oil markets over the past 30 years had handicapped the development of local industries, impacting on finance planning and the allocation of scarce resources.

Citing statistics, he indicated that the cost of imported petroleum in 2004 amounted to just under $800 million, nearly doubling the US$420 million spent in 2001 and last year, “over 60 per cent of the country’s earnings in the export sector was spent on the importation of petroleum products.”

Turning to the Memorandum of Understanding (MOU) signed with Venezuela to upgrade the Petrojam refinery, Mr. Patterson said the “result of the upgrade will be to expand the capacity of the refinery by about 42 per cent to
50,000 barrels per day and through the introduction of new processing technology to increase the proportion of higher quality fuel produced from the crude supplies.”

This new technology should see the refinery being able to process heavier crude that will attract a comparatively lower price on the market.

The MOU calls on the Petroleum Corporation of Jamaica (PCJ) and the Venezuelan-based PDVSA to be 50/50 partners in the US$500 million expansion of the oil refinery.

“The final equity percentage will be dependent upon capital invested in the project in the form of cash or tangible and intangible assets directly related to the refinery operation and the project development costs,” Mr. Patterson said.

He further stated that Jamaica was continuing bilateral discussions through its mission in Venezuela, with a view to advancing the Petrojam Project as well as developing other projects.