Guyana will take 'only half' of its fuel needs from Venezuela
By Miranda La Rose
Stabroek News
February 21, 2007
Venezuela is willing to provide this country with more than 50% of its oil needs under the Energy Cooperation Agreement Petrocaribe but Guyana is not willing to put all of its eggs in one basket.
Contacted about reports that Guyana was willing to buy all of its fuel supplies from Venezuela, Chief Executive Officer Joseph O'Lall told Stabroek News that Guyana would be buying half of the country's petroleum needs or 5,200 barrels per day from Venezuela on concessionary terms under the Petrocaribe agreement from May 1, 2007.
There has been no other decision taken in this regard, he said.
He said any increase in supply would depend on the demands of the local players: Guyana Oil Company, SOL, Esso Standard Oil and Texaco Oil Company. Guyana at this point in time is "not willing to put all its eggs in one basket," he said.
Asked whether Guyana would be increasing its supply from Venezuela in the near future, Prime Minister Sam Hinds reiterated that only half of the local needs would be met by the state-owned PDVSA (Petróleos de Venezuela), while the rest would be coming from Trinidad and Tobago.
To this end, the companies supplying fuel on the local market have all been informed of the developments by way of letter. The purchases by the companies supplying fuel locally are approved and conducted through the Guyana Energy Agency.
The neighbouring twin-island republic Trinidad and Tobago has supplied Guyana's needs on a continuous basis since 2002. Guyana uses just over 10,000 bpd.
PDVSA would supply the petroleum products to Guyana through the subsidiary PDV Caribe, which was created to facilitate the agreement. The concessionary terms on which Guyana would receive the supplies, Hinds said was credit financing to the tune of 40% of the bill. "There is no price concession but there is a concession on part financing, which is 40% of the financing at this time," he explained.
Hinds said this mechanism would provide a balance of payment support to Guyana and other Caribbean countries that have signed on to the Petrocaribe agreement to give them time to adjust to increase prices for petroleum products.
It is expected, he said that once the agreement was implemented the country would have less pressure to find foreign exchange but at some time in the future Guyana would have to find the foreign exchange to pay off the debts owing.
Before 1984, Guyana bought most of its petroleum products from Trinidad and Tobago. From 1984 to May 2002, most were purchased from Venezuela under the San Jose Accord. That accord also gave Guyana the opportunity to borrow money under the Venezuelan Investment Fund for the development of the housing sector in Guyana. After the PDVSA strike in 2002, Guyana again bought all of its supplies from Trinidad and Tobago.
The Petrocaribe agreement was agreed to bilaterally between a number of Caribbean countries including Guyana and Venezuela in July 2005 in Jamaica. The general agreement included the establishment of a fund for social and economic development in the wider region for which Venezuela made the first capital injection of US$50 million; facilitating the installation of a storage infrastructure for member states who subscribe to it; shipping being provided at cost to move petroleum within the region; and the provision of training to enhance efficiency in the use of conventional and renewable energy sources.