Access to the Caracas Energy Cooperation Agreement (CECA) will mean that Guyana will not have to pay cash for its oil supplies from Venezuela, according to Prime Minister Sam Hinds.

He said that it would ease the pressure on the country's foreign exchange and on its national budget. Under the present arrangement with the state-owned Venezuelan company PDVSA, Guyana pays cash for all its oil imports.

Prime Minister Hinds explained to Stabroek News yesterday that as a beneficiary under the agreement Guyana would be granted a credit facility that would allow it to pay for a portion of its oil imports over a 15-year period at a two per cent interest rate. The facility kicks in when the world price for oil is between US$15 -US$30 a barrel.

The oil is supplied on the condition that it is used internally and not resold to anyone outside Guyana.

President Bharrat Jagdeo is to sign a framework agreement to this effect during the summit of the Association of Caribbean States on December 12, in Margarita, Venezuela. The Prime Minister explained that the agreement was the same as that signed by the other states that are beneficiaries under the CECA. Barbados, Belize, Haiti, Jamaica and St Vincent, Costa Rica, El Salvador, Guatemala, Honduras and the Dominican Republic are countries in the Latin and Caribbean region that enjoy beneficiary status under the agreement.

About the amounts that will be supplied under the agreement, Prime Minister Hinds explained that that was tied to the quantities historically imported. But he explained that it would have to fall within the quota Venezuela had set aside for supplying beneficiary countries.

When Caracas extended the facility to the CARICOM states Guyana was excluded with one Venezuelan official explaining that Guyana and Venezuela had a different kind of "conversation". This was an oblique reference to the more than three-decades old border controversy arising from Venezuela's repudiation of the 1899 Arbitral Award, which was a full and final settlement of Guyana's western border with Venezuela.

The Venezuelan foreign minister at the time also explained that petroleum had historically been "a political weapon," in yet another reference to the border controversy.

However, Venezuela later revised her position, extending the facility to Guyana. When Guyana's planned accession to the CECA was announced last week, Guyana's Foreign Minister, Rudy Insanally, told reporters that it was an indication that the relationship had moved the point where petroleum was considered a political weapon.

The announcement was made at a press conference at the end of the two-day official visit to Guyana by Luis Alfonso Davila, Venezuela's foreign minister.

Guyana's accession to the CECA was one of several agreements reached during Davila's visit, according to the joint communiquT issued before his departure. Others included intensified cooperation under the aegis of the High Level Bilateral Commission (HLBC) and continued commitment to the Good Officer process under the aegis of the UN Secretary General and the establishment of a "hotline" between the two ministers so that they could be in permanent communication.