Each
month since he has been President of Venezuela (1999),
Hugo Chavez has announced some preposterous giveaway
programme.
Initially,
they were programmes in Venezuela, but never realised.
Later, on trips around the world, his Venezuelan giveaway
programmes were directed at other countries.
PetroCaribe
was announced in Puerto La Cruz, Venezuela, on June
29, 2005, as a Chavez oil programme for the Caribbean
countries at the meeting.
With
the exception of Cuba, they were members of the Caribbean
Community (Caricom), English speaking countries and
Suriname.
The
countries at the Puerto La Cruz meeting were: 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?
T&T
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 per cent 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:
The
accord is a threat to T&T’s efforts to provide
a natural gas solution to the region.
T&T
would lose the seat of the FTAA headquarters which
it had actively pursued.
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 T&T.
In 2004, T&T’s oil subsidy on petroleum
products was $320 million and in 2005 it would be
over $1 billion.
There
would be risks to other energy co-operation 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.
Petroleos
de Venezuela SA (Pdvsa) 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 Pdvsa (Petroleos de Chavez).
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 spent some time in T&T which gave me the opportunity
to study the petroleum industry and its position in
regard to PetroCaribe.
T&T
is not only the largest economy in Caricom, but is
the only major oil producer in the Caribbean, with
the third largest refinery in the region (after Hovensa
in the US Virgin Islands and the Isla Curacao refinery
which Venezuela leases).
Petrotrin
refinery, 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 per cent of its products and imports
110,000 b/d crude feedstock from Venezuela, West Africa
and Brazil. It 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, 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 T&T is its liquid natural gas (LNG)
production and export market, which is mainly to 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 the three billion cubic feet per day of
non-associated natural gas. In this category, T&T’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, ie, 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 programme
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 programme. The name of the programme has changed
several times and the companies spent millions of
dollars (Lagoven alone, $200 million), but Venezuela
has no LNG train, while T&T as of December 2005,
has four LNG trains. (Nor will the 8,000-kilometre
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, one important
point is never mentioned. Chavez has over-committed
Venezuela’s oil exports. 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.
Dr. Emma Brossard,
Phd. worked in the oil industry in Venezuela for many
years. Petroleumworld not necessarily share these
views.
