Petrocaribe, the 19 member nation agreement for energy cooperation, is a political initiative that seeks to facilitate the access to hydrocarbons for Caribbean nations without the negative consequences of intermediation and speculation.
The program was initiated in 2005 by late Venezuelan president Hugo Chavez, to resolve the “asymmetries in access to energy resources through new favorable, equitable and fair exchange schemes between the countries of the Caribbean region,” most of them energy consumers and without state control of the supply of resources.
Venezuela, which has one of the largest hydrocarbon reserves in the world, ignored the needs of its neighbors for many years and instead, oriented its resources to meet the needs of the market and of rich countries. This changed under Chavez’s mandate.
Looking to the South
Petrocaribe corresponds to a change in the direction of Venezuela’s relations with the South, towards a vision of unity proposed under the Bolivarian Alternative for the Peoples of Our America (ALBA) and guided by the principles of solidarity and cooperation.
In addition to fostering solidarity among the Caribbean peoples, the creation of Petrocaribe was the first energy agreement based on cooperation, social development and justice signed between a group of states from any region in the world.
ALBA was born as an alternative to neoliberal proposals such as the Free Trade Agreement for the Americas (FTAA), with the revolutionary leader described as a "tool of imperialism for the exploitation of Latin America."
How does Petrocaribe work?
Petrocaribe is comprised of 19 nations: Antigua and Barbuda, Bahamas, Belize, Cuba, Dominican Republic, Grenada, Guatemala, Guyana, Haití, Honduras, Jamaica, Nicaragua, Dominican Republic, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and the Grenadines, Suriname and Venezuela.
Based on the principles of solidarity of as part of Petrocaribe, Venezuela accepts payment of hydrocarbons provided through varying means, offering special prices for different goods and services.
According to former oil minister Rafael Ramirez, "we're not talking about discounts...We're talking about financial facilities, direct deliveries of products, [and] infrastructure."
Under Petrocaribe, the short term partial payment period for 60 percent of the Venezuelan oil bill increased from 30 to 90 days. The remaining 40 percent of the can be paid through a 17-25 year financing agreement with 1 percent interest if oil prices are above US$40 per barrel.
In exchange for oil, Venezuela accepts payment in goods and services at lower price. As such, Cuba pays part of its bill through medical, education and sport services, while Nicaragua pays with meat and milk, and the Dominican Republic sends black beans. By 2013, Venezuela had received 1,410,000 tons of basic food items, including textiles and 62,000 cattle through Petrocaribe.