Letters & Opinion

PetroCaribe – Beginning of the End, or End of the Beginning?

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Chronicles Of A Chronic Caribbean Chronicler By Earl Bousquet

PetroCaribe is in the news again, with a former Jamaica energy minister and the current president of the island’s manufacturers and exporters association calling on the Andrew Holness administration to swiftly reinstate its oil pact with Venezuela under the PetroCaribe Agreement.

The calls were aired in print in The Gleaner under the headline: ‘Burdening Energy costs trigger yet another call to re-engage PetroCaribe talks.’

Like everywhere across the Caribbean, from Jamaica to Guyana and Barbados, the rupture and necessary realignment of energy supplies for certainty is demanding that governments and private sector entities ‘wheel-and-come-again’ on the issue of where they source energy from, most demonstrably ready to put aside and even dump previously-long-held positions that created political and ideological barriers in the way of what should be normal trade.

Today, all CARICOM nations, including Guyana, Suriname and Trinidad & Tobago, have had to take a brand-new look at their energy policies, whether from a standpoint of the new and burgeoning oil-based Guianas, or the necessary readjustment policies forced upon the region’ once-upon-a-time sole petroleum exporter, Trinidad & Tobago.

But CARICOM’s energy problems didn’t start with the COVID Supply Chain hiccups, or the fighting in Ukraine.

Instead, it goes back decades ago to the mid-to-late 20th Century, when the world’s petroleum industry was taken-over by seven huge oil multinationals, mainly based in the USA, which manipulated world oil prices, with Saudi Arabia and other member-states of the Organization of Petroleum Exporting Counties (OPEC) through a global oil cartel called The Seven Sisters.

The cartel comprised vertically integrated oil companies that dominated the world oil industry from the 1920s to the 1970s, five in the UDSA and two in Europe.

The five American companies were: Standard Oil Company (New Jersey) which became Exxon in 1972; Standard Oil Company (California) that was later renamed Chevron; the Texas Company which became Texaco in 1959; Socony-Vacuum Oil Company which became Socony Mobil in 1955 and then renamed Mobil in 1966; and Gulf Oil Company.

Chevron bought Gulf in 1984 and in 1998 Exxon and Mobil merged to form Exxon-Mobil.

The other two Big Oil sisters were the Anglo-Persian Oil Company (which changed its name to Anglo-Iranian in 1935 and to British Petroleum in 1954) and the Royal Dutch/Shell group.

The British government held a majority share in British Petroleum (BP) from 1914 to the 1980s, when Margaret Thatcher’s conservative government sold its shares to private investors.

Although ownership was divided between Dutch (60%) and British (40%) interests, Shell had its operating and commercial headquarters in London and was therefore legally regarded as a British company.

The internecine relationship between the Seven Sisters was indeed incestuous, mothers mixing-and-matching to create brothers and sister by way of new offshoots for territorial control in different parts of the whole wide world — until circa 2000, when Venezuela and Cuba decided to challenge the prevailing much-more-sophisticated Status Quo at OPEC.

Presidents Hugo Chavez and Fidel Castro led a move that created the PetroCaribe mechanism that countered the extractive over-pricing the oil majors had traditionally forced on non-oil producing nations in the developing world, particularly in this case, the wider Caribbean grouping of English, French, Dutch and Spanish-speaking nations washed by the Caribbean Sea, including along the South American coastline.

Through the Petrocaribe Agreement, Venezuela offered petroleum and related products at amazingly low prices compared to that charged by traditional American and European suppliers — and most CARICOM nations (except Trinidad & Tobago and Barbados) joined the pact and benefitted greatly from provision of high-quality, low-priced petrol and petroleum products.

All was going well, and the CARICOM nations involved felt okay with the long-term low-interest repayment arrangements involved – until the US started offering Shale and Fracking gas to CARICOM member-states, as an alternative to PetroCaribe.

None other than then US Vice President Joe Biden summoned CARICOM leaders to Washington in 2015 to urge them to dump PetroCaribe fuel and adopt US gas, totally ignoring the cost to governments and people of hurried conversion of energy supplies from oil to gas.

With the 2016 US Presidential elections around the corner, the CARICOM governments politely asked Biden to put the issue on hold.

Five years later in March 2019, with another US Presidential election approaching, then President Donald Trump decided he would score big where Biden failed and invited five CARICOM leaders to Mar-a-Lago to essentially open the way for dismantling the Petrocaribe Agreement — from within.

Jamaica was among the first to have frozen PetroCaribe’s ability to continue to help oil the Jamaican economy affordably, the Bahamas, Dominican Republic, Haiti and Saint Lucia also following-up with application of restrictions on Venezuela’s embassies in the respective countries.

The US-backed minority ‘Lima Group’ of Organization of American States (OAS) member-nations applied Washington’s imposed sanctions against Venezuela with more verve, including the CARICOM five, led by Jamaica and Saint Lucia.

Trump would lose office in 2020, but President Biden was no less inclined to preside over Petrocaribe’s end, eventually banning trade with Venezuela (and Cuba) in US currency, thereby effectively preventing CARICOM nations from paying Venezuela for PetroCaribe deliveries, as that would now be declared illegal by Washington – and with all the implied threats of punishment.

The Biden sanctions on PetroCaribe effectively killed the implementation of the agreement, but it’s spirit and intent were never weakened – and Caribbean governments and people, facing the hard and harsh realities of the multiplicity of energy problems today, are starting to re-think their earlier forced hands-off position voluntarily adopted under the looming threat of the cumulative effects of US sanctions.

Today, Jamaica’s manufacturers and exporters are verily calling on the Holness administration to take a page from President Biden and bite his lips, virtually swallow his vomit, and send clear friendship signals to Caracas, never mind 2019.

This after President Biden, more than twice this year (in June ahead of hosting the Summit of the Americas and last week following the blowing-up of Russia’s pipelines to Europe through Germany.

So, is it the beginning of the end of US efforts to kill PetroCaribe, or the end of the efforts began by then Vice President Biden in 2015 to force CARICOM nations to dump a good economic deal with Venezuela, for geopolitical reasons.

Recent developments suggest both questions can have the same answer.

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