Part 3: CARICOM’s PetroCaribe Conundrum

This series examines Guyana’s Oil & Gas options globally on the eve of the Final Quarter of the 21st Year of Century 21, as the world’s richest nations pay higher costs to fight inflation and try to avoid pending recession, while also scurrying to secure adequate alternative energy supplies to replace Russian gas.

WHEN Presidents Hugo Chavez and Fidel Castro dreamed up the PetroCaribe agreement in just short of two decades ago, not one barrel of oil had been extracted in Guyana.
ExxonMobil’s initial discussions with the PPP/Civic administration, (circa 1996) were originally fruitless, but fructified less than a decade later following deals signed up under the APNU+AFC alliance after 2015.
Today, ExxonMobil is leading Guyana’s oil digs alongside Hess and CNOOC; and PetroCaribe, after being derailed by the Trump Administration between 2018 and 2020, is ready to roll again with CARICOM nations willing to revive the earlier relationship.

But a former regional science adviser doesn’t support reviving PetroCaribe, instead suggesting Trinidad & Tobago, Guyana and Suriname can do a better job of leading the region out of the fossil fuel zone and achieving a 2050 zero-carbon target.

Dr. Neville Trotz, a former Science Adviser to the Caribbean Community Climate Change Centre (CCCCC), spoke during an oil and gas webinar hosted in July by the Guyana Business Journal and Magazine.
His comments also followed Vincentian Prime Minister, Dr Ralph Gonsalves saying at the earlier July 4 Caribbean Community (CARICOM) Summit in Suriname that member-states were seeking to resume the ‘favourable’ PetroCaribe arrangement with Venezuela, under which most were able to purchase oil on generous long-term repayment terms.

About half of Guyana’s oil was also obtained through PetroCaribe at the time, bartering with paddy and polished rice to compensate.
But the arrangement reportedly deteriorated from 2015, after Guyana started producing oil and Venezuela recalibrated its longstanding claim to Guyana’s Essequibo region.

Dr Trotz believes Guyana and Suriname, as new and young boys on the region’s oil bloc, should marry their new finds ‘with Trinidad and Tobago’s experience as an oil and gas player,’ to satisfy the Caribbean’s energy needs.
By his measure, the 2050 net-zero deadline should see CARICOM nations stop using fossil fuels and switch to more environmentally-friendly renewable energy sources like solar, wind and hydropower, which will protect member-states from the climate crisis and its rising sea levels, floods and other catastrophes.

By using regional energy, Dr. Trotz reasons [that] Caribbean countries should be able to fund the climate mitigation and adaptation efforts needed and support other plans such as the region’s Food Security ambitions, which will require fertilisers that can be produced from natural gas.

He also posits that oil and gas resources (fossil fuels) must be harnessed to help transform national energy sectors and the shift to renewable energy.
All the above is quite well and good, but absent are critical elements that escaped the judgement of proposing a two-decades-long transition from oil and gas to solar, wind and hydro-power: How it will affect the people for whom it’s meant.

Back in 2015, then US Vice-President Joe Biden unsuccessfully sought to have CARICOM member-states dump PetroCaribe’s ‘dirty Venezuelan oil’ for clean American shale gas.
But he had also clearly underestimated the eventual cost to individual Caribbean households of converting from one type of energy to another.
And then there’s the education factor.

CARICOM has, for decades, been preaching ‘Buy Local’ to reduce the ever-rising food import bill, but to no avail; and same with better waste management through recycling and less plastic use.
And the majority in most nations is still not vaccinated against COVID.

Another important factor overlooked is that, with few exceptions, most CARICOM states already owed significant amounts to Venezuela when the PetroCaribe agreement fell on sanctions imposed by President Trump after he met five CARICOM leaders in Florida in 2018.

Guyana and Venezuela are no longer dancing the PetroCaribe tango, but it doesn’t mean that either side should automatically seek to undermine the other’s existing energy-related bilateral or multilateral agreements or commitments with third parties.

For example, Saint Lucia doesn’t owe Venezuela for PetroCaribe, but the Philip J. Pierre administration has already reopened discussions with Caracas about activating an agreement to reduce fuel and electricity costs.
Saint Lucia is using its tax earnings on fuel imports to subsidise cooking gas and fuel, to prevent prices rising and discourage private transport entities from raising minibus fares too highly.

President Dr. Irfaan Ali has touted creation of a new regional energy security plan harnessing natural gas resources in Guyana and Suriname and using Guyana’s oil and gas resources to support creation of ‘a new energy mix’ that’ll see the country gradually reducing its heavy dependence on fossil fuels.

This approach, separate and distinct from PetroCaribe, can certainly run alongside the revived Venezuelan initiative, whose extremely-generous terms remain very attractive to today’s CARICOM leaders, most of whom were nowhere around when the arrangement was launched in June 2005.

During its first decade, PetroCaribe was helpful to Guyana and all other CARICOM member-states that signed-on – and even Trinidad & Tobago and Barbados, which hadn’t joined, eventually embraced the initiative, neighbouring Trinidad & Tobago sharing bilateral petroleum production agreements with Venezuela, also forcefully shelved by the Trump sanctions.

Meanwhile, President Biden has more than once indicated his willingness to conclude a deal with Caracas to allow the American oil major, Chevron, to resume production in Venezuela — but only for the US market.
The US president is also prepared to do like he did with Saudi Arabia last month when he visited and swept their political differences under the carpet in return for sweet oil deals.

Guyana and Venezuela’s ongoing territorial troubles notwithstanding, Washington is prepared to make deals with both, in the US national interest – again underlying the decades-old declaration by Henry Kissinger, America’s most effective diplomat in modern times, that ‘America has no friends, only interests!’