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Petrocaribe: union to be free, invincible

Petrocaribe is an Energy Cooperation Agreement based on solidarity support proposed by the Bolivarian Government of Venezuela intended to overcome asymmetries with regard to access to energy resources. This agreement aims at establishing a new favorable, equal and just exchange scheme between the counties of the Caribbean region, most of them without a State-controlled supply of these resources.    

Petrocaribe has been conceived as a multilateral body capable of ensuring the coordination and articulation of energy policies, including oil and its by-products; gas; power, and its efficient use; technological cooperation; training; the development of energy infrastructure; and the efficient use of alternative energy sources, such as wind, and solar energy, among others.

This organization was established on June 29, 2005, through an Energy Cooperation Agreement signed by 14 Caribbean countries during the First Energy Summit of Caribbean Heads of State and/or Government on Petrocaribe held in the city of Puerto La Cruz, in eastern Venezuela.

On September 6, 2005, the Second Summit of Caribbean Heads of State and/or Government on Petrocaribe was held in Montego Bay, Jamaica. On August 10-11, 2007, Caracas hosted the Third Summit on Petrocaribe. The 4th meeting of dignitaries of countries associated to Petrocaribe will be held in Cienfuegos, Republic of Cuba in December 2007.

Countries signing the agreement
Petrocaribe initiative was signed in principle by 14 countries: Antigua and Barbuda, Bahamas, Belize, Cuba, Dominica, Grenada, Guyana, Jamaica, The Dominican Republic, Saint Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines, Suriname, and Venezuela. At the 3rd Summit on Petrocaribe, Haiti and Nicaragua formally joined the initiative.

Petrocaribe aims at contributing with the transformation of the Latin American and Caribbean societies, making them more equitable and cultured, more participative and oriented toward solidarity. Therefore Petrocaribe is conceived as an all-embracing proposal, aimed at eliminating existing social inequalities and fostering high standards of living as well as promoting effective people’s participation in shaping their own destiny.

Petrocaribe Energy Security Treaty
With a view to guaranteeing energy security and stability in the Caribbean region, 10 countries attending the 3rd Summit held in August 2007 subscribed the Petrocaribe Energy Security Treaty, put forward by the President of the Bolivarian Republic of Venezuela, Hugo Chávez. Signatory countries were: Grenada, Belize, Cuba, Dominica, Haiti, Nicaragua, St. Vincent and the Grenadines, Jamaica, Suriname, and Venezuela.

This mechanism is intended to enhance refining capacity and build or improve energy infrastructure within the region for hydrocarbon shipment, reception, transportation, storage, and distribution. Petrocaribe also aims at developing policies and actions through which each country earmarks 10% of its sowing capacity to the production of the volumes of ethanol that are strictly necessary, builds gas liquefaction and re-gasification plants and introduces gas into its energy matrix.

The treaty also promotes the rational use of energy resources in order to save and make the most efficient use of these resources. For this purpose, the initiative promotes the development of petrochemical poles, the replacement of high-energy consumption equipment with more efficient equipment, and the use of alternative energy sources such as wind, solar, geothermal, and hydroelectric energy, among others.

Member countries pledged themselves to organize and consolidate bi-national joint ventures and to negotiate directly between states without intermediaries.

Political Declaration of the 3rd Summit
The 16 Petrocaribe member countries signed the Political Declaration of the 3rd Summit, held in Caracas. This document provides for the review of the progress of this energy union mechanism, born in June 29, 2005, and ratifies the will of the signatory countries to consolidate energy union as an instrument of political and strategic alliance within the region.

The Declaration also highlights the role the Bolivarian Alternative for the Peoples of our America (ALBA) plays in signaling the way toward regional union based on social justice, solidarity, the enhancement of social programs and grand-national projects that foster economic development and trade exchange.

More than just a Supply Agreement
In terms of operation, the Petrocaribe Energy Cooperation Agreement is much more than a hydrocarbon supply agreement for Caribbean countries. It constitutes a political initiative destined to provide financial as well as structural facilities that guarantee a direct supply to countries in the region where the hydrocarbon market is affected by intermediation and speculation.

Petrocaribe implies the articulation of previously existing agreements like the San José Agreement and the Caracas Energy Agreement. With regard to this latter, it has improved upon its 25% financing of the bill, with a one-year grace period, to be paid over 15 years, at 2% interest. 

Now, Petrocaribe proposes a financing scale between 5% and 50% of the oil bill, using current hydrocarbon prices as a reference. The grace period has also been extended from one to two years, and it provides for extending the payment period from 17 to 25 years, lowering the interest rate to 1% if oil price tops US$40 per barrel. Short-term payment of 60% of the bill is extended from 30 days to 90 days.

Based on the principles of solidarity of this agreement, the Bolivarian Republic of Venezuela is willing to accept that part of the differentiated payment of the bill be made with goods and services, for which in certain cases, it may offer special prices.