Since its implementation
in 2005, the Caribbean region has benefited enormously from the
Petrocaribe scheme. Under the initiative, member countries, such as
Jamaica, Cuba, Antigua and Barbuda, Nicaragua and Honduras, were
permitted to pay 40% of Venezuelan oil imports within 90 days and pay
the remaining 60% at low annual interest rate of 1% over a 17-25 year
period.
Since Hugo Chavez's
death, however, the future is not so rosy. The present incumbent,
Nicolás Maduro, recently increased the 1% interest rate to, in some
cases, as high as 4% 1.
Venezuela is undoubtedly one of the region's largest creditor. Last
year, Jamaica was estimated to owe Venezuela around $2.4 billion for
oil. While, according to Bloomberg, some have estimated that 35% of
external Caribbean debt will be owed to Venezuela by the year 20152.
In response, many
Petrocaribe members have begun to look for alternative energy options
on the home front, in the realisation that continued membership to
the scheme would be unsustainable. Dr. Victorio Oxilia, The
Executive Secretary of the Latin American Energy Organisation
(OLADE), recently highlighted the issue, when he underscored the
importance of Latin American and Caribbean beginning to import less
and export more oil3.
With many others also question the benefits of Petrocaribe and the
economic dependence it forces upon its members, the selling of
licensing rounds has seen a huge rise after a number of Oil and Gas
finds in the area. Currently one of the world's main LNG exporters,
Trinidad and Tobago are now looking to boost oil production, and have
more than doubled their Oil and Gas activity since 2010. Zac Phillips, an analyst at Fox Davies, claims
that Trinidad and Tobago have revitalised their energy industry much
like Nigeria and the UK's industries4. Energy Minister, Kevin Ramnarine, plans to increase production from
90,000 barrels/day to 120,000 barrels/day by the end of next year,
20145.
A number of international
companies have expressed their interest in investing in the Caribbean
Oil & Gas industry which holds 20% of the world's total oil
reserves. This July, Repsol
began negotiations for a contract with Nicaragua to begin exploration
in Bluefields Bay. Whilst many
multinationals, such as BP,
Parex Resources, Niko Resources,
Centrica and Noble Energy, have
already invested heavily in the region. Lee
Hunt, consultant
and former president of the International Association of Drilling
Contractors, was not wrong when he commented that:
'"What
once was a trickle is fast becoming a stream in the Caribbean, with
new announcements of expanding deep-water exploration lease offerings
and drilling permits being issued"' 6.
In
order to encourage and facilitate international investment, the 2-day
Caribbean Oil, Gas & Power Summit in September 2013, will bring
together some of the world's leading industry players, including
Energy ministers, senior Oil and Gas company representatives,
Contractors, Service Companies and Solution-providers, to discover
the latest investment and business opportunities and strengthen
industry ties.
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