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 countries 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 that was held at Montego Bay, Jamaica. In 2007, Caracas will host the Third Summit on Petrocaribe.

Countries signing the agreement

Antigua and Barbuda, Bahamas, Belize, Cuba, Dominica, Grenada, Guyana, Jamaica, The Dominican Republic, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines, Suriname, and Venezuela signed the Petrocaribe multilateral agreement.

Objective

The objective of Petrocaribe is to contribute with the transformation of the Latin American and Caribbean societies, making them more just and cultured, more participative and more supportive with regard to domestic as well as regional issues. Petrocaribe’s is a comprehensive proposal, aimed at eliminating existing social inequalities and fostering high standards of living as well as promoting effective citizenry participation in shaping their own destiny.

More than just a supply contract

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

Petrocaribe implicitly carries with it concepts established in previous 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 expects to extend the payment period from 17 to 25 years, lowering the interest rate to 1% if the price per barrel of oil tops US$40. Short term payment of 60% of the bill is extended from 30 days to 60 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.

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