Petrocaribe: union to be free, invencible
Petrocaribe is an Energy Cooperation Agreement based on solidarity support proposed by the Bolivarian Government of Venezuela intended to overcome asymmetries with regard to access to energy resources. This agreement aims at establishing a new favorable, equal and just exchange scheme between the counties of the Caribbean region, most of them without a State-controlled supply of these resources.
Petrocaribe has been conceived as a multilateral body capable of ensuring the coordination and articulation of energy policies, including oil and its by-products; gas; power, and its efficient use; technological cooperation; training; the development of energy infrastructure; and the efficient use of alternative energy sources, such as wind, and solar energy, among others.
This organization was established on June 29, 2005, through an Energy Cooperation Agreement signed by 14 Caribbean countries during the First Energy Summit of Caribbean Heads of State and/or Government on Petrocaribe held in the city of Puerto La Cruz, in eastern Venezuela.
On September 6, 2005, the Second Summit of Caribbean Heads of State and/or Government on Petrocaribe was held in Montego Bay, Jamaica. On August 10-11, 2007, Caracas hosted the Third Summit on Petrocaribe. The 4th meeting of dignitaries of countries associated to Petrocaribe will be held in Cienfuegos, Republic of Cuba in December 2007.
Countries signing the agreement
Petrocaribe initiative was signed in principle by 14 countries: Antigua and Barbuda, Bahamas, Belize, Cuba, Dominica, Grenada, Guyana, Jamaica, The Dominican Republic, Saint Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines, Suriname, and Venezuela. At the 3rd Summit on Petrocaribe, Haiti and Nicaragua formally joined the initiative.
Petrocaribe aims at contributing with the transformation of the Latin American and Caribbean societies, making them more equitable and cultured, more participative and oriented toward solidarity. Therefore Petrocaribe is conceived as an all-embracing proposal, aimed at eliminating existing social inequalities and fostering high standards of living as well as promoting effective people’s participation in shaping their own destiny.
Petrocaribe Energy Security Treaty
With a view to guaranteeing energy security and stability in the Caribbean region, 10 countries attending the 3rd Summit held in August 2007 subscribed the Petrocaribe Energy Security Treaty, put forward by the President of the BolivarianRepublic of Venezuela, Hugo Chávez. Signatory countries were: Grenada, Belize, Cuba, Dominica, Haiti, Nicaragua, St. Vincent and the Grenadines, Jamaica, Suriname, and Venezuela.
This mechanism is intended to enhance refining capacity and build or improve energy infrastructure within the region for hydrocarbon shipment, reception, transportation, storage, and distribution. Petrocaribe also aims at developing policies and actions through which each country earmarks 10% of its sowing capacity to the production of the volumes of ethanol that are strictly necessary, builds gas liquefaction and re-gasification plants and introduces gas into its energy matrix.
The treaty also promotes the rational use of energy resources in order to save and make the most efficient use of these resources. For this purpose, the initiative promotes the development of petrochemical poles, the replacement of high-energy consumption equipment with more efficient equipment, and the use of alternative energy sources such as wind, solar, geothermal, and hydroelectric energy, among others.
Member countries pledged themselves to organize and consolidate bi-national joint ventures and to negotiate directly between states without intermediaries.
Political Declaration of the 3rd
The 16 Petrocaribe member countries signed the Political Declaration of the 3rd Summit, held in Caracas. This document provides for the review of the progress of this energy union mechanism, born in June 29, 2005, and ratifies the will of the signatory countries to consolidate energy union as an instrument of political and strategic alliance within the region.
The Declaration also highlights the role the Bolivarian Alternative for the Peoples of our America (ALBA) plays in signaling the way toward regional union based on social justice, solidarity, the enhancement of social programs and grand-national projects that foster economic development and trade exchange.
More than just a Supply Agreement
In terms of operation, the Petrocaribe Energy Cooperation Agreement is much more than a hydrocarbon supply agreement for Caribbean countries. It constitutes a political initiative destined to provide financial as well as structural facilities that guarantee a direct supply to countries in the region where the hydrocarbon market is affected by intermediation and speculation.
Petrocaribe implies the articulation of previously existing agreements like the San José Agreement and the Caracas Energy Agreement. With regard to this latter, it has improved upon its 25% financing of the bill, with a one-year grace period, to be paid over 15 years, at 2% interest.
Now, Petrocaribe proposes a financing scale between 5% and 50% of the oil bill, using current hydrocarbon prices as a reference. The grace period has also been extended from one to two years, and it provides for extending the payment period from 17 to 25 years, lowering the interest rate to 1% if oil price tops US$40 per barrel. Short-term payment of 60% of the bill is extended from 30 days to 90 days.
Based on the principles of solidarity of this agreement, the Bolivarian Republic of Venezuela is willing to accept that part of the differentiated payment of the bill be made with goods and services, for which in certain cases, it may offer special prices.
The Petrocaribe agreement is based on the following political principles of:
Sovereignty with regard to the use of energy resources
Looking towards the South
Based on these principles, Venezuela redefined its energy policies. With regard to domestic policies this is reflected in the way the country has regained control over the oil industry as well as PDVSA’s new role. At the international level, it’s reflected through the vision of solidarity, complementarity, and unity as a mechanism whereby countries of the region can free themselves from the enormous difficulties in gaining access to energy resources which intensify social inequalities and deteriorate the standard of living.
Venezuela, having the greatest hydrocarbon reserves in the world and the largest refining complex on the planet, traditionally has turned its back on its neighbors. This scheme favored the interests of richer countries and ignored the heritage that Venezuela shares with the Caribbean and Central America: the same sea, the mixture of ethnic backgrounds (African and Amerindians), the same colonial history and fight for the independence of our peoples, the same needs and potential for development stemming from invaluable natural resources.
Today, PDVSA, and its subsidiary, PDV Caribe, are developing the political, technical, and infrastructure platform to overcome this historic isolation and build sovereignty and secure sources of energy for the Petrocaribe Agreement member countries.
This initiative is a seed for the transformation of Latin American and Caribbean societies, part of ALBA’s (Bolivarian Alternative for the Peoples of our America) project to sow these regions with the ideals of the Liberator, Simón Bolívar, in an effort to build a great nation. This constitutes the support the Government of the Bolivarian Republic of Venezuela is extending its Central American and Caribbean neighbors, who by themselves can’t face the speculation, the tensions and the high prices that affect hydrocarbons; but that united, gather the force required to face these obstacles.
Petrocaribe’s decision making instances include:
1. Ministerial Council
The Ministerial Council is made up by the Ministers of Energy (or their equivalent) of the countries that signed the Agreement, and its functions include:
· Coordinate the corresponding policies, strategies and plans;
· Delegate duties and responsibilities in the bodies that may be created for the performance of specific tasks, whenever it is deemed necessary;
· Agree on and approve of the topics with priority interest for the Organization, as well as the studies, workshops and work groups providing the technical and legal support;
· Exercise the maximum accountable instance in relation to the performance of the Executive Secretariat;
· Agree on the admission of new members and the withdrawals that might occur;
· Hold a regular meeting each year and as many special meetings as it may be deemed necessary;
· Appoint a president and an alternate who shall call and chair the meetings.
2. Executive Secretariat
The Executive Secretariat shall be exercised by the People’s Ministry for Energy and Oil of the Bolivarian Republic of Venezuela, the following being its duties:
· Prepare the agendas for the Ministerial Council meetings.
· Directly manage and administrate the business of Petrocaribe.
· Guarantee the execution of and follow up the decisions made by the Ministerial Council, as well as submit the corresponding reports and recommendations.
· Set the priorities in terms of studies and projects defined by the Ministerial Council.
· Propose to Ministerial Council that funds be assigned to carryout the studies that may be necessary.
Alba Caribe Fund
To contribute to the economic and social development of Caribbean countries, Petrocaribe counts on the Alba Caribe Fund which is constituted by resources coming from the savings generated by the financing of the oil bill and direct trade, as well as coming from financial and non-financial instruments.
For the purpose of activating the Alba Caribe Fund, the BolivarianRepublic of Venezuela contributed US$100 million in capital.
Nine countries have benefited from this fund: Antigua and Barbuda, Belize, Cuba, Dominica, Grenada, Haiti, St. Kitts and Nevis, Saint Vincent and the Grenadines, and Nicaragua. At the same time, steps are being taken to evaluate and design new projects.
For the purpose of implementing the operating guidelines of Petrocaribe, PDVSA has created a special purposes subsidiary, PDV Caribe S.A., which has the following objectives:
· Support the joint planning, organization, and development of capabilities to transport, receive, store, distribute, and commercialize hydrocarbons through a direct, secure, and reliable means of supply for Caribbean and Central American countries for the purpose of promoting sustainable development.
· Promote infrastructure projects which lead to the sovereign management of energy in the Caribbean and Central America aimed at improving the collective well being and the quality of life for their people.
· Coordinate carrying out social projects in member countries with financing from the Alba Caribe Fund.
· Promote technological cooperation, technical training, and activities related to the conservation of electrical energy and the use of alternative energy sources, aimed at promoting cleaner, more rational and efficient use of conventional and renewable energy sources.
· Implement supply agreements, create Mixed Companies, and other operations associated with carrying out the Petrocaribe Agreement.
· Coordinate required transportation in order to fulfill contracts through PDV Marina and/or Transalba, shipping company that supports Petrocaribe operations.
Petrocaribe is an entity that enables energy policies and plans, which is also committed to carrying out research focused on the rational and efficient use of natural and energy resources in the Caribbean region for the benefit of its people. With this in mind, two studies are carried out:
1. Research on Renewable Energy Sources in the Caribbean
This initiative will identify potential renewable energy sources existing in the region (wind, solar, biomass), to diversify the energy matrix of the countries in accordance with the environmental principles of sustainable development. In this sense, the initiative will help to mitigate poverty and reduce inequalities by creating new jobs and income opportunities. It will increase the guarantees regarding issues concerning energy security and contribute to a healthier environment.
· Identify the potential of the Caribbean considering.
· Social impact (job creation, poverty eradication).
· Environmental impact (environment improvement)
· Impact on the regional integration (integration factor).
· Energy production advantages (energy saving, rational use and security).
· Associated technologies (effectiveness and efficiency).
· Location and costs of required infrastructure (equipment, installation, facilities).
· Potential financing sources.
2. Research on the Energy Situation in the Caribbean
This research will help minimize the adverse effects of energy costs, stemming from speculative and geopolitical factors, on the countries of the region and reduce the asymmetries in the Caribbean through the use of economic, social and cultural complementarity.
· Analyze the public policies of the countries of the region.
· Quantify and evaluate the energy matrix of each of the countries.
· Evaluate the efficiency of the energy chain.
· Estimate the impact of energy costs on the economy of each of the countries of the region.
· Study the nature and magnitude of the risks associated with the domestic and international environment.
· Identify the standard of living indicators of the people of each country of the region.
· Determine the infrastructure and logistics associated with the energy matrix.
· Prepare the Strategic Plan for the Caribbean Energy Policy.
Seven Joint Ventures
Belize, Cuba, Dominica, Grenada, Nicaragua, St. Kitts and Nevis, St. Vincent and the Grenadines.
Eleven Supply Agreements
Antigua and Barbuda, Belize, Cuba, Dominica, Grenada, Guyana, Haiti, Jamaica, Nicaragua, St. Kitts and Nevis, St. Vincent and the Grenadines.
The Organization and its Objectives
PETROCARIBE is a permanent intergovernmental organization, hereinafter called “The Organization” in accordance with the Energy Cooperation Agreement subscribed by the Governments of Antigua and Barbuda, Bahamas, Belize, Cuba, Dominica, Grenada, Guyana, Jamaica, Dominican Republic, Saint Vincent and the Grenadines, Saint Lucia, San Kitts and Nevis, Suriname and Venezuela, on September 6, 2005, in Montego Bay, Jamaica, and shall carry out its functions according to the provisions of this document.
A. The main objective of the Organization is to coordinate the public energy policies of member countries, with the purpose of:
· Minimizing the risk associated with the security of energy supply for member countries;
· Defending the sovereign right to administer the production rate of non-renewable and depletable natural resources;
· Minimizing costs of energy transactions among member countries;
· Using energy resources to solve asymmetries in the framework of regional integration;
· Creating mechanisms to guarantee that savings resulting from energy bills arising in the PETROCARIBE framework shall be used for social and economic development, promotion of employment, increase of production and service activities, public health, education, culture and sports, so that the benefits derived from PETROCARIBE shall be a substantial contribution to the fight against poverty, unemployment, illiteracy and lack of medical care in member countries.
The Organization shall be guided by the principles of sovereignty and equality of its member countries. Member countries shall act in good faith according to the articles of association of the Organization.
The Organization shall have its headquarters in Caracas, Venezuela.
The official languages of the Organization shall be English and Spanish.
A. The founding members are those who signed the PETROCARIBE Energy Cooperation Agreement on June 29, 2005 in the city of Puerto la Cruz, Venezuela.
B. The members of the Organization are the founding members, as well as all countries in the Caribbean region that have requested membership and have been unanimously admitted by the Ministerial Council.
C. Only countries with interests and needs similar to those of member countries may be admitted into the Organization. Membership requests shall be done using a request form and shall be submitted to the Ministerial Council for approval.
D. The modality of observing country shall be institutionalized. The status of observing member shall be formalized through a request form and shall be submitted to the Ministerial Council for approval. Final membership shall depend on the willingness of the country and the unanimous approval by the Ministerial Council.
E. The Ministerial Council is the only body authorized to consider and approve membership in this organization.
The Organization shall have two bodies:
I. The Ministerial Council
II. The Executive Secretariat
I. The Ministerial Council
The Ministerial Council shall be the highest decision-making body of the Organization.
A. The Ministerial Council shall be composed by delegations of representatives from member countries. Each delegation shall include one of more delegates and shall be directed by the Minister in charge of the energy area or someone else named by him or her.
B. Each member country shall be physically represented in all meetings of the Ministerial Council, yet, a 60% attendance of member countries shall be required to hold a session.
C. Each member country has the right to one vote. All decisions made by the Conference require a consensus agreement.
A. The Ministerial Council shall meet regularly once a year in Venezuela.
B. The Ministerial Council shall approve extraordinary meetings according to the requests of the Executive Secretariat. Member countries wishing to hold an extraordinary meeting shall communicate their request to the Secretariat, who shall in turn inform member countries of such petition.
C. The Ministerial Council shall designate a President and an Alternate who shall convene meetings, and manage and handle matters related to the Conference until the next meeting of the Council.
i. The Presidency of the Ministerial Council shall be permanently held by the Bolivarian Republic of Venezuela.
ii. The Vice Presidency of the Ministerial Council shall rotate.
Subject to the discretion of the Ministerial Council, the host country of the Ministerial Council shall be rotated in alphabetical order.
The functions of the Ministerial Council shall, in agreement with the objectives of the Secretariat, be the following:
· Coordinate the policies, strategies and corresponding plans;
· Delegate functions and responsibilities in bodies that shall be created to comply with specific tasks, when necessary;
· Agree and approve topics of priority interest for the Organization, as well as studies, workshops and working groups that provide technical and legal support for such priority interests;
· Guarantee that the Executive Secretariat reports and renders account to the Ministerial Council;
· Agree on the acceptance of new members and the withdrawal of members if necessary;
· Allocate human, financial and logistic resources.
II. The Executive Secretariat
The Executive Secretariat shall carry out the executive functions of the Organization according to the provisions of these Articles of Association and under the tutelage of the Ministerial Council.
A. The Executive Secretariat shall function as the headquarters of the Organization and shall be ascribed to the Ministry of Energy and Petroleum of the Bolivarian Republic of Venezuela.
B. The operational costs of the Secretariat shall be paid by the Bolivarian Republic of Venezuela.
C. The executive personnel of the Executive Secretariat shall not be restricted to Venezuelan citizens; yet, the costs resulting from citizens of other countries shall be shared.
The Executive Secretariat shall be directed by a General Secretary who shall be appointed by the Minister of Energy and Petroleum of the BolivarianRepublic of Venezuela. The Executive Secretariat shall have as much personnel as needed.
A. The General Secretary shall be the authorized legal representative of the Organization, and shall be present in all meetings.
B. The General Secretary shall be the chief officer of the Secretariat and shall have direct responsibility over all matters of the Organization, according to the Ministerial Council.
A. The main function of the Executive Secretariat shall be to guarantee the coherence, consistency and quality of the generated technical studies, with the purpose of quantifying the risks associated to the dynamics and complexity of the Caribbean energy market.
B. Additionally, the Executive Secretariat shall carry out the following functions:
· Preparing agendas for meetings of the Ministerial Council;
· Directly administering PETROCARIBE matters;
· Guaranteeing the implementation and follow up on the decisions adopted by the Ministerial Council, as well as submitting reports and corresponding recommendations;
· Establishing studies and projects defined by the Ministerial Council as a priority. Studies and projects shall be financed by the Secretariat;
· Proposing to the Ministerial Council the allocation of resources to guide necessary studies.
These Articles of Association may be amended by unanimous decision of a duly convened session of the Ministerial Council.
Version revised on 9/5/05 5:10 p.m.
It was adopted by the Ministerial Council on September 5, 2005.
III Summit Petrocaribe, was held in Caracas - Venezuela, August 2007.
The leaders of Petrocaribe’s 16 member countries met in the city of Cienfuegos, Cuba, in december of 2007, to hold the IV Petrocaribe Summit of Heads of State and/or Government, with the purpose of furthering the progress of the Latin American and Caribbean energy union initiative.