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  Petrocaribe: a shield against misery

Four years ago, the world witnessed the birth of Petrocaribe as an Energy Cooperation Agreement signed by 14 countries that were already “concerned about global economy trends and, particularly, about policies and practices prevailing in industrialized countries that could lead to more exclusion of the Third World smaller countries with economies that are more dependent on international developments.”

Presidents from the Caribbean region already envisaged that this situation entailed the need of having secure energy supply channels. Today, the concern of the 14 signatory countries has not only been confirmed, but reality is consolidating a cooperation mechanism that goes beyond energy security: the political will of the 14 presidents has forged a shield to defend millions of human beings against misery. 

Under the premises of fair trade, complementariness, solidarity, social justice and common will to develop, this regional integration initiative is still the only true alternative that developing countries have to get secure and reliable access to energy sources.

Most presidents in the region have clearly understood the situation. As a consequence of this, now 19 countries are now part of this initiative (including Panama that formally requested to enter Petrocaribe). All of them are representatives of the so-called Third World, that part of the planet where, according the World Bank’s figures, 70% of the consumption basket of one poor inhabitant is spent in food and energy.

An alternative based on solidarity
According to figures provided by the Dominican President, Leonel Fernández, 57 countries, 14 of them in Latin America, have a annual per capita income of up to US6,000 or less and they are net oil importers.

According to President Fernández, this initiative does not follow Capitalist predatory guidelines; “Venezuela is teaching an impressive lesson to the world that solidarity and generosity can prevail over speculation, greed and unquenchable thirst for wealth.”

Is there any contradiction between the condition of Venezuela as oil exporting country and Petrocaribe’s approach? The Dominican President himself commented at the 5th Extraordinary Summit of Petrocaribe Heads of State and/or Government, held in Venezuela in July 2008, that “it even seems odd that an oil producing and exporting nation invites countries that are oil net importers to generously share that patrimony and richness, instead of meeting only with other producing and exporting countries.”

Petrocaribe is consistent with the policy that Venezuela has proposed even in the context of the OPEC, which was presented by President Chávez in Saudi Arabia at the 3rd Summit of Heads of State and/or Government of the Organization, held in November 2007.

On that occasion, the Venezuelan president invited his counterparts to assume solidarity-based proposals to alleviate the hardship of million of people that inhabit the world’s 50 poorest countries, which total oil consumption is only 700 thousand barrels per day. However, up until now Petrocaribe has remained as a single initiative in the region and the whole world.

Tangible results
Since the signing of the Petrocaribe Energy Cooperation Agreement and until the first quarter 2008, cumulative supply of oil and oil products in the framework of the initiative amounted to 59 million barrels. The financed part of oil bill (US$2.007 billion) accounts for a US$921 million saving, estimated at US$14/bbl., for countries that received the supply. These resources are used by those countries to implement development projects. 

Furthermore, with the creation of mixed companies between PDVSA and state-owned oil companies from eight Petrocaribe member countries, joint investments worth US$552 million are being made for the development of refining, storage and fuel supply infrastructure.

These works include the Petroleum Liquefied Gas (PLG) Filling Plant that is operating since February 2007 in St. Vincent and the Grenadines, the Fuel Storage and Distribution Plant that is about to be put into service in Dominica, and the Camilo Cienfuegos Refinery that was reactivated in Cuba and is operating since December 2007 with a production capacity of 67,000 barrels per day. It is worth mentioning also the power generation projects that are being developed in Nicaragua, Haiti, Antigua & Barbuda, Dominica and St. Kitts and Nevis.

These projects are intended to develop a long-term supply strategy aimed at overcoming obstacles these nations had to manage their energy matrix in a sovereign fashion. Before Petrocaribe, the countries in the region did not have any control over the crude oil and products supply chain and they depended on transnational corporations and the intermediaries’ speculation.

The strategy being implemented with this initiative includes establishing competitive costs and supply in the short term and eliminating intermediation in the long term with the construction of own facilities and synergies in every country. This will allow each nation to be benefited in terms of energy security. 

However, since Petrocaribe is more than a mere supply agreement that offers payment facilities for signatory countries, it is worth highlighting the social projects in the areas of tourism, education, health, housing, environmental sanitation, road networks, sports and agriculture that are being carried out in the framework of the Alba Caribe Fund. This Fund was created to finance social and economic programs with resources from financial and non-financial instruments, as well as contributions, which may be agreed, from the financed portion of the oil bill and savings produced by direct trade. US$106 million from this Fund have been allotted to 68 projects in 10 signatory countries.

The assurance of a secure and reliable supply affordable for the Caribbean peoples, as well as savings obtained through this initiative do not constitute by themselves a shield against misery. The shield is complemented with concrete actions aimed at facing difficulties in access to food products and guaranteeing food security and sovereignty.

This is the reason why, at the most recent meeting of the organization, President Chávez put forward the Petroalimentos initiative that calls for the creation of a Permanent Council of Agriculture Ministers, which met for the first time in Honduras, entrusted with the concrete task of establishing guidelines and designing initiatives for the construction of food security and sovereignty within the region.

A new energy map
As part of the Energy Security Treaty signed at the 3rd Summit of Petrocaribe Heads of State and/or Government held in Caracas in August 2007, which identified the action axes in the areas of oil, gas, electric power and renewable energy sources, the region’s energy ministers have approved a portfolio that includes 10 projects on energy saving and efficient use, 44 pilot project on renewable energy sources, in the areas of thermal solar, photovoltaic solar, geothermal and wind energy.

The Renewable Energy Technical Team is carrying out a study on the potential of installing hydroelectric power generation micro plants for the effective incorporation of these sources to the member countries’ primary energy matrix, taking into account the experiences in the region.

These projects are part of the actions derived from the study on the Caribbean Energy Matrix performed by the Organization, which helped determining that the region countries, while they have a potential for the development of alternative energy sources, are highly dependent on oil for power generation. Concerning the gas sector, a master plan for natural gas supply in the Caribbean, Central America and South America was approved. If Petrocaribe were an instrument for the submission of the peoples from the small islands, it would not be devoted to the effort to reach their energy security.

A new economic space
Does Petrocaribe represent a disadvantageous agreement for Venezuela? Absolutely not! With this foreign policy initiative, the country recovers its presence in a space that is inherent with it, not only due to geographical proximity, but also to the deep cultural and historical bonds joining our peoples.

In the past, Venezuela had given away this space to transnational corporations and intermediary, who turned this region into a “premium market”, because, since they controlled all the links in the commercialization chain, they were the ones establishing rules and prices.

The country, sitting on huge hydrocarbon reserves, indifferently looked at its neighbors that were under the dominion of transnational powers. By coming back to this space, Venezuela poses a new paradigm that counters the mercantile rules that governed the regional energy market, and promotes on a solidarity and sincerity basis the recovery and strengthening of sovereignty and independence of nations.

Within the framework of this Venezuelan geopolitical strategy of constructing a pluripolar world, Petrocaribe is preparing itself to take a huge lap and transform the region into a development pole, making use of the potentialities of its countries; an economic space that serves to solve, in a joint fashion, common problems, but that also serves to have a presence as a bloc in negotiations with other powers, regardless of their size.

The Venezuelan president, Hugo Chávez, is convinced that in a not very distant future, the Caribbean nations will be able to establish strategic alliances with other nations with strong economies, such as China, Russia and other Venezuela’s friend countries. “I’m certain that we can do it and even more if we are together,” pointed out President Chávez. 

Taking the closing words of the Nicaraguan President, Daniel Ortega, this group of countries has bet for fair trade; the one that takes into account the existing differences among the economies of the most diverse nations and that does not condition dialogue, cooperation or the joint search for solutions.