US$278.25 Million Inflows from Petro Caribe Agreement
June 7, 2007The Full Story
Minister of Industry, Technology, Energy and Commerce, Phillip Paulwell has informed that as of May 31, inflows from Petrojam Limited under the Petro Caribe Agreement totalled US$278.25 million, which amounted to just over J$18 billion.
“Under Petro Caribe, and at the current prices for petroleum, 40 per cent of the payment due for the oil purchased at market prices is available as a loan at the very concessionary interest rate of 1 per cent over 25 years, inclusive of a two-year moratorium on principal,” the Minister said, during his contribution to the 2007/08 Sectoral Debate in the House of Representatives, yesterday (June 6).
The Petro Caribe Energy Co-operation Agreement, which is now in its second year, provides a facility for Jamaica to purchase 23,500 barrels of crude oil per day from Venezuela at full market price.
In the meantime, Mr. Paulwell defended Jamaica’s use of the Gulf Reference Price as the price referencing system for crude oil.
The Gulf Reference Price is the price of crude oil obtaining in the Gulf Coast of the United States (US), where the Bulk of US refineries are located. It has been used over the years by successive Jamaican Governments and other Caribbean territories.
“The Gulf pricing mechanism is used as a point of reference on which to base prices throughout the Americas. It is used because of the variables that make it relevant to this geographical area. This include risks peculiar to the region, distance between suppliers and markets, product type and quality, and the means of transportation,” Mr. Paulwell said.
He also informed that regional producers such as Colombia, Venezuela and Trinidad and Tobago use the Gulf Reference Price. “It is transparent. It is the basis for pricing petroleum products within the Americas,” the Minister added.
Reference prices are largely determined by geography and as a result, different regions of the world have devised peculiar pricing mechanisms. Mr. Paulwell said that, “this in evident for example, in the Arabian Gulf Reference Price and the European Reference Price.”