Venezuela has pledged to continue her PertoCaribe program, despite a worsening economic situation in that country. The Government of Venezuela has insisted that the program is sustainable.
According to John Mencias, Deputy Chairman of Alba PetroCaribe Belize Energy Limited (APBEL) Venezuela’s program is indeed sustainable because the PetroCaribe program is self-adjusting.
Mencias explained that as the price of crude decreases, the cash portion of the agreement increases, and the financed portion becomes less until the price rises again.
In essence, Mencias said, since the price of crude has dropped, Belize will make larger up-front cash payments for shipments of oil from Venezuela. The financed portion, which includes the loans, will be restricted to smaller amounts, until the price of crude goes back up.
Mencias added that the entire PetroCaribe program only accounts for about five percent of Venezuela’s fuel exports, which is why the country is confident that it can comfortably sustain the program. Venezuela’s exports to larger countries has a much greater impact on their economy than PetroCaribe commitments, Mencias said.
Economic experts, including those of the International Monetary Fund (IMF) have warned that as the financial situation in Venezuela worsens the country may eventually have to consider cutting the PetroCaribe program.
But at a summit last week, Venezuelan Foreign Minister, Rafael Ramirez told representatives from PetroCaribe countries that his government would continue the initiative under any circumstances.
Over the weekend at an OPEC meeting, Venezuela lobbied to have oil production cut in order to boost the price of crude so that the country would be able to meet its debt obligations and stabilize its economic situation amid commodity shortages.
OPEC rejected this request in order to remain competitive with shale-oil producers in North America who use oil shale rock fragments to produce a crude oil alternative.