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PetroCaribe:
Chavez’s Impossible Energy Program
By
Emma Brossard
Each
month since he has been President of Venezuela (1999), Hugo Chavez
has announced some preposterous giveaway program. Initially, they
were programs in Venezuela, but never realized. Later, on trips
around the world, his Venezuelan giveaway programs were directed
at other countries.
PetroCaribe was announced in Puerto La Cruz, Venezuela, on June
29, 2005, as a Chavez oil program for the Caribbean countries
at the meeting. With the exception of Cuba, they were members
of the Caribbean Community and Common Market (Caricom), English
speaking countries, and Suriname. The countries at the Puerto
La Cruz meeting were: Trinidad and Tobago (T&T), Jamaica,
Bahamas, Antigua and Barbuda, Barbados, Dominica, Grenada, Guyana,
St. Kitts and Nevis, St. Lucia, St. Vincent, Suriname, and Belize.
The first two countries, T&T and Jamaica, account for most
of the population of the region, with Jamaica’s 2.4 million,
and T&T’s 1.3 million population. Chavez also included
his friend Fidel Castro and Cuba along with the 13 Caricom members,
but the question is why, when Castro already receives over 90,000
barrels per day (b/d) from Venezuela. Did Chavez plan to double
oil exports to Cuba?
Trinidad and Tobago along with Barbados did not sign the PetroCaribe
Agreement. Prime Minister Patrick Manning logically berated those
who signed the Venezuelan oil deal, arguing that the accord had
the potential to erode the T&T economy, which accounts for
approximately 14% of the regional economy. Manning pointed out
that Petrotrin (state owned) stood to lose some 45,000 b/d in
product sales to the region! Other reasons for concern: 2) The
accord is a threat to Trinidad’s efforts to provide a natural
gas solution to the region. 3) T&T would lose the seat of
the FTAA Headquarters, which it had actively pursued. 4) It also
raised the issue of T&T’s willingness and ability to
continue providing support to Caribbean countries. Trinidad established
in 2004, the Caricom Petroleum Fund, whereby T&T have given
Caricom countries financial assistance, including forgiving Guyana’s
$500 million plus debt to Trinidad. In 2004, T&T’s oil
subsidy on petroleum products was TT$320 million, and in 2005
it would be over TT$1 billion!
5) There would be risks to other energy cooperation agreements,
with a question mark over access to crude. There was concern whether
Chavez’s PetroCaribe was a requiem for Caricom and CSME
(Caricom Single Market Economy), a tenuous initiative, by dividing
members, further. 6) Petroleos de Chavez would gain control of
the regional market and the international companies would be pushed
out. Domestic storage facilities must be owned by a state entity,
either on its own, or in collaboration with Petroleos de Chavez
(PDVSA). Thus, the PetroCaribe clients would have only one oil
supplier. Payment to Venezuela would be in sugar, bananas, and
water (from Dominica, which was to be the hub to distribute oil
products to the other islands).
In July, after the PetroCaribe Agreement was signed, I arrived
in Port of Spain and spent the rest of the summer, which gave
me the opportunity to study Trinidad’s petroleum industry
and its position in regard to PetroCaribe. Trinidad is not only
the largest island in the Caribbean, but is the only major oil
producer in the Caribbean, with the 3rd largest refinery in the
region (after Hovensa in the U.S. Virgin Islands, and the Isla
Curacao refinery, which Venezuela leases).
Trinidad’s Petrotrin refinery at Pointe-a-Pierre, formerly
owned by Texaco (the first non-British oil company operating in
Trinidad) has a 160,000 b/d capacity. Petrotrin’s refinery
produces a wide range of products: LPG, gasoline, diesel, kerosene,
aviation fuel, and gas oil (resid). The bulk of the 50,000 to
60,000 b/d of product that Petrotrin sells to the region goes
to Jamaica and Guyana for their bauxite industries, with a significant
amount of light products and middle distillates going to the rest
of the region. Petrotrin exports around 85% of its products, and
imports 110,000 b/d crude feedstock from Venezuela, West Africa
and Brazil. Petrotrin also refines crude for Barbados. In addition
to Caricom countries, Petrotrin exports petroleum products to
Puerto Rico, Eastern USA, French Guiana, Guatemala, and Nicaragua.
If Trinidad has to look for different markets for its exports,
which I doubt because Chavez may soon be gone, Petrotrin would
have to meet different product specifications, which would require
upgrading its refinery at Pointe-a-Pierre and this could cost
more than $1 billion. This would be a heavy burden, as Petrotrin
over the past decade invested substantial capital in upgrading
obsolete plant and equipment.
Most important for Trinidad is its liquid natural gas (LNG) production
and export market, which is mainly the United States. T&T
’s oil production in 2005 was 140,000 b/d (BP, Trinmar,
and Petrotrin as producers), but Trinidad’s main production
now is natural gas. BP is the main producer of Trinidad’s
3 billion cubic feet per day of non-associated natural gas. In
this category, Trinidad’s gas reserves in 2005 were 19 trillion
cubic feet.
By comparison, Venezuela has greater reserves of natural gas,
however it is mostly associated gas, i.e., produced only when
oil is produced, and with declining oil production, Venezuela’s
gas production is also falling. This makes the Venezuela-T&T
cross border gas development for LNG less likely. For LNG, the
Loran reservoirs, in the Plataforma Deltana block 2 (ChevronTexaco)
with 4.5 trillion c/f, will not be possible, because that natural
gas will be needed domestically. Venezuela still has no LNG production,
even though Lagoven in 1990 spearheaded the Cristobal Colon LNG
Program to be developed off the Gulf of Paria Peninsula, with
Shell and Exxon invited to join as venture partners. It took the
Venezuelan Congress three years to approve the program. The name
of the program has changed several times, and the companies spent
millions of dollars (Lagoven alone, $200 million), but Venezuela
has no LNG train, while Trinidad as of December 2005, has four
LNG trains. (Nor will the humongous 8,000-kilometer Amazonia gas
pipeline from Venezuela to Argentina that Chavez has recently
proposed be built, because Venezuela does not have the needed
natural gas! or the funds!)
With all the discussion about PetroCaribe in the press in the
Caricom countries and on the Internet, one important point is
never mentioned. Chavez has over committed Venezuela’s oil
exports, big time! Where are the 200,000 b/d (?) that Chavez is
offering the islands coming from? (There is no total amount in
the PetroCaribe Agreement; it seems to range from 98,000 b/d for
Cuba, 21,000 b/d for Jamaica, and 10,000 b/d for Guyana, for example.)
Venezuela’s oil production continues to decline -- desperately
needed maintenance and investment in the oil fields has been abandoned
under Chavez, and incompetent men placed in charge of Petroleos
de Chavez. With Chavez’s efforts to push out the foreign
oil companies that now account for half of Venezuela’s oil
production (in the marginal fields and the Orinoco Oil Belt) their
needed investment, technology and production will disappear, and
Venezuela will become an oil importer to satisfy its own 450,000
b/d of oil consumption!
Hugo Chavez is such an artiste in supplying non-existent natural
gas to the Argentine; he can also sell paper barrels to the Caribbean.
He has tried to fool the little islands into thinking he is their
Big Brother -- instead of a dictator giving away the patrimony
of Venezuela, as he seeks friendly votes in the OAS and the UN.
Emma
Brossard,
Ph.D. is well known for her work in the oil industry in Venezuela
and her writings, her book "Power and Petroleum: Venezuela,
Cuba and Colombia, A Troika? " was published in late 2001,
and another book on Venezuela's think tank, "Intevep The
Clash of the Giants", in 1993. Between 1985 and 1994, she
was an adviser to the Presidency of PDVSA and its affiliates.
Petroleumworld not necessarily share these views.
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Petroleumworld 02/18/ 06
Copyright©2006
Emma Brossard, All rights reserved
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